Suppose your job is student loans, you’re employed at a small fry lending institution, or perhaps a larger lender like Great Lakes. Either way, you’d better start looking for a new job because tucked into the Health care bill was another bill installing the Federal Government’s Department of Education as sole originator and collector of student loans; a 100 billion dollar business annually, making it one of our largest banks! Ironically, until last week the government run Direct Loan programs role, upon creation, was as a second fiddle of sorts to private lenders like the Federal Family Education Loan Program, or, FFELP, which had been in existence since 1966. Now, through legislative fiat, the second fiddle is big fiddle, just one more thing the private sector couldn’t be trusted with.
In all fairness, the Direct Loan people say we’ll be saving money by cutting out middle men, ie. the banks, and streamlining the whole receiving and paying affair, making the system more convenient. But does convenience make what was done here right? The way I’m seeing it, government now collects the interest monies private lenders used to. Even better, the Government can loan money at lower rates than the private sector but still choose to run their rates at private sector levels. Can you say profit margin! Can you say advantage! Those cheeky fellows!
Actually, that sounds like a pretty dirty trick played by the Gov on the private sector now doesn’t it?
Image Credit: whitehouse.gov
