Edwards Calls For Revamping College Loans

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Sen. John Edwards (search) is calling for revamping the nation's college loan program, eliminating the role of banks and making loans directly to students from the federal government.

The North Carolinian, seeking the Democratic presidential nomination, believes such a move would save "billions of dollars" each year and allow financial assistance to be provided to an additional 3 million youngsters every year.

"We should give the money to the people who need it the most, our kids," Edwards said in remarks prepared for delivery here Monday.

Currently, the federal government offers subsidies to banks and other lenders to lower interest rates on student loans (search), but the loans are actually made by the financial institutions.

Under Edwards' plan, the loans would come directly from the federal government, which also would have to assume the liability for loans that aren't repaid.

The plan Edwards was releasing does not carry a specific pricetag, but he said the money currently being paid to financial institutions could be shifted to student aid programs, including his "college for everyone" proposal.

Under that package, students who pass college prep classes and agree to work at least 10 hours a week would be offered free tuition at community colleges or public universities.

Edwards said he was timing his announcement to coincide with the opening of the new school year.

"Parents are getting ready to buy their kids new school clothes and supplies," said Edwards. "But for parents and students who are about to go to college, they're in sticker shock from the increase in college tuition."

A sour economy and budget cuts in states around the country have forced most colleges to sharply increase tuition, and Edwards said there are projections that up to 500,000 students a year are being forced to forego college because of rising costs.

In addition, Edwards called for an ending of "legacy" admissions, a policy where colleges routinely admit the children of alumni. He said that makes it tougher for students who are the first in the family to attend college to gain admission. He also called for an increase in spending on Pell Grants (search), a need-based grant program aimed at aiding low-income youngsters in financing college costs.

The proposal came as Edwards wrapped up a six-day bus swing across Iowa, where precinct caucuses in January open the presidential nominating season.

During the "real solutions" tour, Edwards has been touting a thick booklet he issued offering his views on issues ranging from schools to the environment to bolstering the sagging rural economy, hoping to add heft to his campaign.