With the U.S. House of Representatives poised to take up legislation that would eliminate the Federal Family Education Loan (FFEL) program and provide all federal student loans directly from the government, lawmakers opposed to the plan are coming armed with talking points straight from the student loan industry. Unfortunately for these legislators, many of the lenders' arguments against the Direct Loan program just don't stand up to scrutiny.
At Higher Ed Watch, we have expended a lot of ink (or at least a lot of blog space) over the last six months analyzing and critiquing the loan industry's arguments. In preparation for House floor action on the legislation, we thought it would be a good time to revisit some of the lenders' most dubious claims and to run excerpts from previous posts that responded to them.
Here are some of the arguments you're likely to hear and our take on them:
Argument: By proposing to provide federal student loans entirely through the Direct Lending (DL) program, the Obama administration and Democratic Congressional leaders are trying to "nationalize" or impose a "government takeover" of the federal student loan program.
Our Response: "We have news for the lenders: it is impossible to nationalize a government program. By definition, the FFEL program is already a nationalized program because it is a government program, just like direct lending...Sorry, lenders; it's a little late to complain about nationalization. Lyndon Johnson settled that fight a long time ago." (Can You Nationalize a Government Program?)