Well, the budget came out today and student loan lenders and servicers were gasping for air. The proposal eliminates all lender made loans other than Direct loans (funded by the taxpayer 100% by the way) on or after 7-1-09. GASP! What does that mean?
The entire student loan industry as we know it may disappear and all that will remain is a national system of government made loans to students. Believe it or not, the private industry works very hard to prevent defaults on taxpayer money. And, lenders are still making loans to students while losing money on each loan they make. The cuts were made in the Bush administration fueled by the democratic majority. Cuts too deep for lenders to survive for a long time.
While I believe the current system needs reform (it's not the lender who is at fault), the level of nationalism proposed is staggering. In a very short time, capitalism has been replaced with socialism. Scary, but true. And, who will lose out? It's not the "big boys" but the little guy who will bear the brunt of the demise of the FFEL Program.
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