Alexander: “The Department of Education Should Not Be a $500 Billion National Bank”

Senate Backs Alexander’s Proposal to Preserve Choice in Student Lending for 12 Million Students

Posted on April 24, 2009

The Senate passed a motion last night offered by U.S. Senator Lamar Alexander (R-Tenn.) to maintain choice in student lending during conference negotiations on the Budget Resolution between the House and the Senate. The motion instructed Senate negotiators to preserve the Alexander amendment on student lending that the Senate unanimously approved earlier this month. “Packing up this nation’s successful student-lending program and sending it to Washington to be administered there is not what 12 million students and 4,400 universities have chosen to do,” said Alexander, a former U.S. secretary of education and president of the University of Tennessee. “I am pleased that the Senate passed this motion to let the student loan program continue to work the way it should so the government can focus on all the other things that need attention like fixing the banks, getting credit flowing again and restoring auto companies. “Arne Duncan, I think, is the president’s best appointee. But as secretary of education, he should focus on paying teachers more for teaching well and creating more charter schools—that’s his agenda. I don’t think Secretary Duncan came to Washington to be named Banker of the Year. The Department of Education should not be a $500 billion national bank.” On April 2, 2009, the Senate passed the Alexander amendment to preserve the popular Federal Family Education Loan (FFEL) Program, which the president’s budget proposed 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.