POLITICS

Jesse Jackson: Students Gouged On Loans While Banks Get Free Money

05/16/2009 05:12 am ET | Updated May 25, 2011

Reverend Jesse Jackson Sr. is launching a campaign to pressure the federal government and student lending institutions to reduce loan rates in an effort to make college more affordable, the civil rights activist tells the Huffington Post.

On Tuesday, Sallie Mae reported that student debt over the past four years has been rising faster than blood alcohol levels at a beer pong tournament. Student debt shot up 44 percent over the past four years, with the average senior now carrying a $4,100 load. It only looks to be getting worse. The average freshman already has $2,000 worth of red. That's on top of the roughly $20,000 they'll have in other college-related debt.

Jackson's argument is straightforward. "If banks can be bailed out at one percent, why not students? If the government can borrow money at below-market interest rates, then so should students," Jackson says. "Our point is this: reduce the interest rate on federally subsidized student loans to one percent."

Because banks get "essentially free money," argues Jackson, sticking students with high interest rates is fundamentally unfair.

"They're scalping loans as you would scalp tickets at a ballpark," says Jackson of the banks who get near-zero interest loans from the federal government or Federal Reserve.

Jackson's RainbowPUSH Coalition has launched a website -- reducetherate.org -- and Jackson has begun pressing members of Congress on the issue, he says.

Jackson is pushing for a federal student lending institution, similar to the Federal Home Loan Bank, to be created, "where the target is restructuring access to education to make it more affordable."

Student debt has risen for simple reasons: education costs have skyrocketed -- up 35 percent in the last five years -- while wages have stayed flat. More students now put tuition directly on their credit cards.

Demos, a non-partisan public policy research and advocacy organization, backs Jackson's call for a federal direct loan program and supports a number of bills currently in Congress that could aid students drowning in credit card debt.

Demos cited the Credit CARD Act, introduced by Sen. Chris Dodd (D-Conn.) last month, and the Credit Cardholder's Bill of Rights Act, introduced by Rep. Carolyn Maloney (D-N,Y.), both of which would address abusive credit card practices and speed up reforms the Federal Reserve has proposed but has yet to implement.

For Jackson, it's a matter of right and wrong. "Give them at least the same deal banks are getting," he says.

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