Alternative to student loan reform proposed

An alternative proposal to the Obama Administration’s plan to reform the student loan system recently got the backing of Sallie Mae.

A coalition of organizations has put forward the Student Loan Community Proposal. Under the proposal – which was created by nonprofit, for-profit and state-based organizations – private firms would still play a role in the origination of student loans.

Under the Obama plan, student loans would no longer be privately originated. The goal of the plan is to save $90 billion in public subsidies paid out to banks along with providing those that come from low-income backgrounds the opportunity to pay for school.

The White House’s plan would also provide a guarantee that funds for student loans would be available.

The coalition claims its plan will save the same or more money as the plan from the Obama Administration. The plan also looks to avoid the dangers that may be associated by changing the loan origination system for the over $50 billion of privately-originated loans at 5,000 schools.

The proposal also contends that keeping privately-originated loans also will give parents and students options when shopping for a loan and help preserve 35,000 jobs.

Along with giving support to the plan, Sallie Mae recently released new statistics about another form of student debt – credit card debt. The average credit card debt of a graduating senior in 2008 was $4,100, which was up from $2,900 in 2004.

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