Student loans now back in government's hands


Tacked on to the health care reform bill at the last minute was a bill to overhaul the student loan program and eliminate a $60 billion program for support of private student loans. If the reconciliation bill is passed by the Senate, all future federal student lending will be done by the federal government, with private lenders servicing those accounts. Changes will start July 1 if the Senate passes the bill and it's signed into law.

The non-partisan Congressional Budget Office expects this change to result in $61 billion in savings by eliminating private lenders, who serve as the middlemen. These private lenders were raking in money for making these loans that were being guaranteed not by the banks, but by the government.

House Education Committee Chairman George Miller (D-Calif.) blasted Sallie Mae for its scare tactics about this change. He said in a statement, "Sallie Mae has a history of using scare tactics to hold on to their excessive taxpayer subsidies, bloated CEO salaries and perks, and well paid cadre of Washington lobbyists. Judging by their statements today, it is clear that Sallie Mae will continue to do or say anything in a last-ditch effort to save their sweetheart deal – billions of dollars that we think would be better spent directly helping students pay for college."