As Democrats in Congress marked President Barack Obama's 100th day in office Wednesday by approving a $3.4 trillion federal budget for 2010 that includes the elimination of student loan subsidies for banks and other lenders, Knoxville-based student loan provider Edamerica issued an immediate reaction.
Tony Hollin, chairman and CEO of Edamerica and its sister company Edfinancial Services, which services student loans, said that the companies will have to adjust their mission in a new era in which the federal government will take over the role of student loan provider for the country.
"The budget resolution is a nonbinding outline for followup tax and spending legislation. It's Congress' response to Obama's $3.4 trillion budget blueprint released in February. Unfortunately, the resolution that was adopted Wednesday does nothing to lower the cost of funds for students struggling to pay for college," Hollin said.
The Senate adopted the president's budget by a 53-43 vote just hours after a 233-193 House vote. The approval margins allow the budget to sidestep filibuster rules. The budget calls for the elimination of private lenders' direct roles in making education loans to students, with savings to be used to increase Pell Grants for needy students.
"It's a budget that reduces taxes, lowers the deficit and creates jobs," House Speaker Nancy Pelosi, D-Calif., said. "It honors the three pillars of the Obama initiatives: energy, health care and education."
Obama cheered passage of the plan, saying in a statement that it "builds on the steps we've taken over the last 100 days to move this economy from recession to recovery and ultimately to prosperity."
However, Hollin's reaction to the budget passage was more subdued and prompts the founder of Edamerica and Edfinancial Services, which are among the largest U.S. student loan organizations, to reassess the way his company will do business going forward.
"There's still a lot of work to be done in conference, and we plan to have a seat at the table for those discussions. This plan gives Congress the opportunity to keep the private sector involved in the student loan process, and that's a good thing," Hollin said. "As for the future of our companies, we'll adapt and evolve. We're developing new business models to continue our successful public/private partnerships. The people of Edamerica and Edfinancial Services have been doing the right thing for students, schools and families for over twenty years. That won't change."
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