By having the government take over all federal student loan organizations, it would involve one of the largest expansions of a government program in recent memory. It would dismantle a system that has successfully served generations of Americans. Within a decade the Federal Direct Loan Program would be a trillion dollar operation, making it one of the biggest banks in the world. It would ultimately have responsibility for tens of millions of borrowers...
-- America's Student Loan Providers (July 21, 2009)
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Another month, and another attempt by the Obama Administration to take over a successful portion of the private sector. Banks, cars, and now student loans. I'm beginning to see a trend here.
Today, the House will complete consideration of the Student Aid and Fiscal Responsibility Act of 2009, otherwise known as the public option for higher education (not to be confused with the public option for health care -- but the similarities can't be overlooked). Advocates like the President maintain that if passed, this bill will bring a "level playing field" between government and private options. Sound familiar?
However, history tells us that when it's all said and done, the only one left standing on the "level" playing field tends to be the government.
Ending private sector competition in the student loan industry and making the Direct Loan program the sole provider will kill jobs, and greatly expand the control of the federal government. The Federal Family Education Loans (FFEL) program has been the overwhelming choice for student and parents for the past 40 years. In fact, 78% of all new federal student loans from 2007-2008 were administered through this program. Yet, the government wants to end it. It doesn't make any sense.
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If nothing else, this bill tells us one thing -- if the government can't succeed on its own merits, they'll eliminate the competition. That should concern us all.
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