The Rev. Jesse Jackson, Sr. recently launched a campaign specifically aimed at reducing student loan rates. Given some of the favorable terms granted to financial institutions by the legislation that created the TARP program - also known as "the bailout" - in the wake of last year's credit crisis, Jackson's organization is fighting for students to benefit in a similar way.

The RainbowPUSH Coalition proposes that students who already hold, or are now receiving, federally subsidized student loans should not pay more than 1% interest - "the same favorable terms now being offered to large corporations under the federal bailout plan ... If banks can borrow at 1% or less, then so should our students,"

There's more than interest rate cuts in The RainbowPUSH Education Stimulus Plan. It would also extend the grace period 6 to 18 months, end penalties to schools for student loan defaults, and increase Pell Grants to cover the average yearly cost of a public 4-year institution. But the main focus is extending low interest rates to consumers.

"What we are seeking is fundamental fairness. Our nation's largest banks and financial institutions - including Bank of America, Citigroup, and JP Morgan - are borrowing money from the federal government at a rate of less than 1 percent. However, students are generally forced to borrow for their education at rates in the range of 4 percent to 8 percent. Many are financing their education with credit cards that carry rates of 20 percent or higher."

About banks who get near-zero interest loans from the government or Federal Reserve, "They're scalping loans as you would scalp tickets at a ballpark," Jackson recently told the Huffington Post. He is advocating the creation of new federal entity to oversee access to education funding.

By Darrill Anderson
NASFAA Associate Director of Communications

Posted 04/16/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.