WORDS, MEET ACTION… On the one hand, Ben Bernanke lauds the expansion of education access at all areas of development, including the community college system, as among the best methods to reduce income inequality in the long-term. Now, Bernanke doesn’t set education policy for the Administration. But he does have some sway over the financial services industry, not only in terms of influence but through the levers of policy, so he might be in a position to do something about this.
Some of the nation’s biggest banks have closed their doors to students at community colleges, for-profit universities and other less competitive institutions, even as they continue to extend federally backed loans to students at the nation’s top universities.
Citibank has been among the most aggressive in paring the list of colleges it serves. JPMorgan Chase, PNC and SunTrust say they have not dropped whole categories, but are cutting colleges as well. Some less-selective four-year colleges, like Eastern Oregon University and William Jessup University in Rocklin, Calif., say they have been summarily dropped by some lenders.
The practice suggests that if the credit crisis and the ensuing turmoil in the student loan business persist, some of the nation’s neediest students will be hurt the most. The difficulty borrowing may deter them from attending school or prompt them to take a semester off. When they get student loans, they will wind up with less attractive terms and may run a greater risk of default if they have to switch lenders in the middle of their college years.
Walling off colleges like this, which are a tremendous opportunity for low-income students to achieve a degree and some upward mobility, by making loans unreachable is the equivalent of a new caste system. This would be an absolute disaster for the working class and their children.
If this is so crucial to America’s economic future, surely Bernanke can devise some incentives for banks to make available student loans for community colleges. I mean, he wouldn’t want to be accused of delivering empty, meaningless rhetoric.
…lawmakers asked the Fed to help save the student loan industry two months ago, incidentally… and the Fed took such action after some prodding. There’s plenty of potential to end the roadblocking of community college loans.