Obama Plan to End Role of Private Banks in Student Loans Wins Support

Posted by Trish Riley, July 10, 2009

One of so many Obama initiatives that’s easy to support:

The administration’s view, shared by a number of Democratic lawmakers, is that the private lenders should no longer be paid by taxpayers to operate a virtually risk-free business in which they essentially use taxpayer dollars to originate loans, with repayment guaranteed, and then resell those loans to the Treasury.

Robert Shireman, deputy under secretary of education, said officials had reviewed many proposals from the private student lenders and their supporters and had not been persuaded by any.

“The latest proposal appears to be an effort to grab a billion dollars a year or more that they would be paid for originating loans, which is something that we are able to do in a much more efficient way,” Mr. Shireman said. “So the proposal is not a good use of taxpayer dollars, especially when that money could be used to help students.”

via Obama Plan to End Role of Private Banks in Student Loans Wins Support – NYTimes.com.

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