And, I do understand your point about the value of competition. However, your point would suggest that you do not know a lot about the history of the FFEL program.

The program was never about competition and the free market. The program is GOP-supported, US-style socialism at its best: pay a private company loads and loads of money to administer a government program. And, even better, let the government take on all the risk.

Subsidies distort the market. We all know this. Imagine how much lower the “lower rates” could have been if we, the taxpayers, were not paying lenders as much as 9% in subsidies. The problem is that we cannot trust the government to pass along the lower rates. Instead, they will be used to subsidize the Pell Grant. The value of that is an entirely different conversation.

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See:
http://www.financialaidnews.com/2009/09/22/

Also, have you been keeping up on the issues the US government is having with processing GI Bill payments – they can’t handle the increased demand.

There are options – a combined federal and private solution will work. It may cost a little more – but the results for the students and schools will be better service.

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1. Interest rates and program regs are set by the government. Students are paying 6.8% fixed for the life of the loan in an interest rate enviroment that is much lower! You are paying for the program whether Direct Lending or FFELP. As little as two years ago, many banks began to lower interest rates as a way of competing for your business. Competition makes the program strong and honest. Once the government has the program, what happens to competition and what happens to your choice as students? You have nothing! The FFELP program has been in exsistence for over 45 years and although DL is also available, you have a choice. Think about monopolies and how they work and what the ultimate outcome is? As Grad Students you are not eligible for many of the reduced or free money offered by the government, yet you pay for the program in fees and high rates. You should care! Scream about choice and about making the program better by competition!

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It may be better stated that “until you have to pay your student loans back to the government, cost is not a consideration”, and by then, you are saddled with debt that cannot be dismissed or forgiven according to backruptcy law.

Direct lending will not change that, but the federal student loan interest that WU students pay will help the government offer more Pell grants elsewhere. So if you are big on entitlement programs, there’s the good news.

As far as customer service is concerned while in repayment, Direct Lending will have WU students dealing directly with their loan holder, the federal government. Service with a smile awaits, I suspect.

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