Alexander: Student Loan Washington Takeover “Overcharges Students, Adds Half a Trillion to Debt, Sends 19 Million Students to 4 Federal Call Centers”

Says Obama Administration Motto Seems to be: "If you can find it in the Yellow Pages, the government ought to be doing it"

Posted on March 16, 2010

WASHINGTON – U.S. Senator Lamar Alexander (R-Tenn.) made the following statement today at a press conference hosted by Republican members of the U.S. Senate and House of Representatives on the proposed inclusion of moving from the current student loan system to direct lending as part of the pending health care reconciliation package:

“While they’re at it with health care, the Democrats have decided to add another massive Washington takeover, this time of student loans. This latest Washington takeover would deprive 15 million students – who voted with their feet and chose private instead of direct loans last year – of choosing among 2,000 lenders. Washington will throw out of work 31,000 Americans who now work for agencies helping students apply for loans. They'll replace these lenders with the equivalent of four federal call centers, making the process of getting their loans about as friendly as going to the Department of Motor Vehicles for a driver’s license. And Washington will do this by adding half a trillion dollars to the federal debt – and worst of all, by overcharging students for their loans.

"The Department of Education will borrow money at 2.8 percent, lend it to students at 6.8 percent, and spend the difference on new government programs. But if we really want to save students money, why not just reduce the interest rate by 1.5 percentage points, to 5.3 percent, which would save the average student $2,240 in interest over ten years on their loans?”

Senator Alexander is chairman of the Senate Republican Conference and is a member of the Senate Committee on Health, Education, Labor and Pensions.  He also served as U.S. education secretary and president of the University of Tennessee.