U.S. Senator Lamar Alexander (R-Tenn.) said today that his amendment to the Senate version of President Obama’s budget would preserve choice in student lending for both students and institutions of higher education.
“Putting nearly 15 million student loans in the hands of the federal government could drive up costs for students and universities,” said Alexander, a former U.S. secretary of education and president of the University of Tennessee. “Historically, both students and schools have preferred using private lenders, and we should not take that choice away from them by leaving yet another enormous program to the control of the federal government.”
Alexander’s amendment would support keeping the popular Federal Family Education Loan (FFEL) Program, which the president’s budget proposes to eliminate in favor of government-controlled loans administered under the Federal Direct Loan Program. Currently, the loans most preferred by students come through private lending, with nearly 12 million loans coming through private lenders and only approximately 3 million under the Direct Loan Program (Fiscal Year 2008). In 2008, 4,421 schools (73 percent) used private lenders while 1,613 schools (27 percent) used the Direct Loan program. Alexander noted that schools choose which program to participate in, and that Congress should respect that choice.
“The United States not only has the best colleges and universities in the world, we have almost all of them,” Alexander continued. “And it’s competition and the markets that have helped us get where we are today. We need to make sure that we keep student lending competitive so that students can choose the right program for them.”