Friday News Roundup: Week of February 23-27

Big Government Role in Student Loans

At Some Schools, No More Free Lunches

Stimulus Funds Ease Cuts to Schools

Big Government Role in Student Loans
In the last days of the Bush administration, the Education Department agreed to expand its commitment to buy student loans in the struggling market, leading some to question whether there is still a need for private lenders at all. In a contract, signed on January 19^th, the Education Department agreed to buy $60 billion in student loans – almost enough to buy all federal student loans made last year. Despite the fact that the government already pays a subsidy on most loans made by private lenders to students, this agreement, in an effort to keep the market running, provides capital to lenders to make new student loans. Needless to say, it leaves some wondering whether private lenders have outlived their usefulness. Closer examination by the Office of Management and Budget (OMB) has led a senior official to express doubt about the cost-neutrality of the program. Secretary Duncan has committed to reexamining the deal to make sure that it is helpful, not hurtful, to students and taxpayers. More here.

At Some Schools, No More Free Lunches
Due to increases in the numbers of students unable to pay for lunch and tighter school budgets, some school districts are cutting back on the free lunches given to students without lunch money. In Albuquerque, NM and several other districts around the country, students not enrolled in the federal school lunch program who can’t pay for their lunch now receive a cheese sandwich, fruit, and a milk carton. As family budgets have shrunk amid the struggling economy, debt incurred by school districts providing these added “free lunches” has amassed. In Albuquerque alone, “school lunch debt” has shot up from $55,000 in 2006 to $130,000 in the 2007-2008 school year. With this year’s debt on track to reach $300,000, the district found it necessary to cut the practice altogether. Some parents are angered by the new policy, saying that schools are punishing students who have no control over their parents’ finances. Administrators claim that their choices are limited. More here.

Stimulus Funds Ease Cuts to Schools
Thanks to an influx of money from the stimulus package, schools in Prince George’s County, MD have dropped plans to furlough employees and increase the student-teacher ratio. Gov. Martin O’Malley announced that state aid to schools would be increased to $41.4 million, scaling back job cuts and eliminating the need for increased class sizes and some job cuts. The district will, however, still lose about 800 jobs. More changes are likely when the school board votes on the package. More here.

Briefly Noted:

• Hartwick College offers an option to save $40,000: Squeeze college into 3 years.
• UConn president considers closing campus museums.