The Federal Student Loan Program

In the mele of passing the health care bill and the health care bill redux one might be forgiven for missing entirely the debate, or lack of debate, of nationalized student loans.


Well, the Government took over.  Loans will now be made directly from the government to the student.  This nationalized, or socialized if you wish, program cuts out the banks that have been administering the program under federal loan guarantee for years.


So, the same government that can't control our borders or control medicare fraud is going to run the student loan program. 


And we did this - - - why?

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reader
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reader 04/01/10 - 01:56 pm
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They did it to cut costs.

The banks were just handing out federal money anyway, and taking a cut for themselves. Why should the government give a cut of any money to a middleman? Seems like a good cost cutting solution. Nothing is being nationalized or socialized here. The greed barons are just getting cut out of the action.

Waylon Harris
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Waylon Harris 04/01/10 - 02:32 pm
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And

the government is still contracting with four of the nation's biggest financial institutions to actually administer the loans.

David McCollum
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David McCollum 04/01/10 - 02:49 pm
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As a parent of a college

As a parent of a college student who has student loans, this appears a good thing for the reasons READER indicated. Student loans were being given to the school from federal money that originated from several banks, lending institutions and holding agencies and, without going into the gory details, caused complications that were difficult to track, delays and efficiency problems with the institution not receiving the money when the payment was due. It comes down to the administration of federal money from Point A to Point B and from my view, this seems a much more efficient and better system. A lot of people complaining about "middlemen" getting too much a cut of the action and this seems to address that in a positive way.

Willowysp
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Willowysp 04/01/10 - 02:49 pm
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Question

What does this mean for EXISTING student loans? I'm hearing a lot of buzz, but can't really make a lot of sense out of it.

7
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boucher 04/01/10 - 03:00 pm
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Federal Money?

Are we sure this was Federal money being handed out by the banks? I thought it was a bank loan with bank money, and the loan was guaranteed by the Feds. That doesn't include Pell grants of course.

Are the Feds going to give interest free loans? If not, then instead of paying a "middle man" you're going to be paying the Feds. That might not be bad. Maybe the vig on the student loan can pay for the program?

Who, specifically, in the Federal Government is going to run this program? HEW?

lachowsj
5461
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lachowsj 01/25/14 - 08:58 pm
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HEW

boucher, you need to keep up. HEW, the Department of Health Education & Welfare, went out in 1979 with the creation of a cabinet level
Department of Education and renaming of HEW to the Department of Health & Human Services.

lancejgosnell
310
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lancejgosnell 04/01/10 - 03:22 pm
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Having never earned a degree

Having never earned a degree but still paying roughly $100 a month in student loans until the $12000 I owe is paid off, I am curious if I will see any effects from this new change.

futothosethatfightwhatisright
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futothosethatfightwhatisright 04/01/10 - 04:24 pm
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I will tell you

The former student loan program was basically a scam so that banks could rake in 60 billion a year. Under the new program banks will not make that money, boo hoo. What was happening before was that a bank would give you the loan, knowing that it was backed by the government and if you didn't pay, they didn't lose any money, hell who wouldn't want a piece of that? Those banks would bundle those loans and sell them to other banks, who knew they could never lose money on them, who wouldn't buy those loans? Now the government will do the loans and then sell them to banks, that will still never lose money on them if someone doesn't pay, but they will get fees if you don't and money from the government to just cash your check. I say eliminate all banks, those loans are gold to them, and let Uncle Sam have the fees. Oh and White Male, you are just the type of person that likes to screw over the little guy, working for defense contractors, those guys love to suck the government tit, sleep well.

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boucher 04/01/10 - 10:01 pm
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Defense Contractors?

That's what I like about blogs. So many contributors, like futothosethatfightwhatisright , don't feel bound by facts or logic. I don't work for a defense contractor and haven't for years. Oh yeah, the Army is a defense contractor? If little guys are the subject, I qualify.

As to logic, you are of course assuming that the Federal Government is going to properly run this program. Why please? Do you assume they will apply the same expertise and education that brought us uncontrolled borders, Medicare fraud, massive defense contract overruns, and a sweetheart legislative retirement deal? Hey, the hits just keep coming.

I'll give us this though. The performance of some banks on this program was abysmal. It's probable the Feds couldn't do much worse.

crypted quill
11041
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crypted quill 01/26/14 - 10:23 am
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I believe Mr. Boucher is in a

I believe Mr. Boucher is in a better place now...

R.I.P.

"Perhaps they are not stars, but rather openings in heaven where the love of our lost ones pours through and shines down upon us to let us know they are happy." -- Eskimo Proverb

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