Are American banks attempting to thwart President Obama’s efforts to improve the federal student loan system? The President seems to think so.

Obama recently singled out several of the largest U.S. banks, especially those that have received bailout money from the government. He argued that the banks get an “unwarranted subsidy” from unfair student loan practices.

In a speech at a community college in Troy, NY, Obama said: “the large banks—many who have benefited from taxpayer bailouts during the financial crisis—are lobbying to keep this easy money flowing. This is exactly the kind of special interest effort that has succeeded before and that we cannot allow to succeed again”.

Thousands of college students take on a crushing amount of debt each year in order to pay their tuition bills. Private universities can cost upwards of $50,000 per year, forcing more and more students to take out loans.

However, there has been good news for President Obama and his team. The House of Representatives recently approved legislation that would cut bank/student loan giant Sallie Mae out of a large portion of the $92 billion university student loan business. This act would shift most lending into a program that is run by the U.S. Education Department, giving the government more control over how loan money is distributed.

This bill, which is strongly backed by President Obama, is set to go to the Senate for further consideration. Many Republicans are arguing that this bill will give the federal government too much power over business, and view these initiatives as a takeover of the student loan industry.

What do you think? As students, are you comfortable with President Obama’s loan initiative?