President Obama is expected to sign legislation overhauling the nation’s financial system this week. The new law is designed to prevent a repeat of the 2008 banking industry meltdown. It will also set up a single federal agency to regulate private student loans.
Consumers have complained about predatory loan practices and no enforcement. However, Grinnell College President Russell Osgood says he’s not convinced the new law will effectively regulate private student loans. “We all watched when Katrina happened and the federal agency in charge dropped the ball and look what happened, people died. Now, I don’t think people are going to die, but I am concerned about giving monopoly control over something as important as student loans to a single agency,” Osgood said.
Osgood says, if the new system doesn’t work, the country should go back to having multiple loan providers. “I think we should go back to a system of licensing probably more than one loan originator,” Osgood said. “I think maybe the problem with the old system is that we had too many licensed and too little regulation.”
Osgood made his comments on the Iowa Public Radio program, The Exchange.