We couldn’t agree more with “Our View: Eliminate middleman to alleviate college loans” (May 14) that federal student loans “were created with students, not banks, in mind.”
Because of that, families who must borrow to pay for college are better off getting federally guaranteed loans through the lender-based program (which the administration would eliminate).
Here’s why: Wherever young people aspire to get a college degree or certificate, there’s always a nearby lender, bank or credit union that makes federal student loans. Almost always, a guaranty agency sponsors college planning and financial aid programs. For many families, these have been gateways to higher education.
Borrowers receive extensive default prevention services. It’s a major reason why guaranteed loan borrowers have lower default rates. It’s also a reason why 75 percent of schools, including 90 in Washington, prefer guaranteed loans.
Regarding the projected cost savings from eliminating guaranteed loans and giving the U.S. Department of Education’s direct loan program a monopoly, no one seriously believes it would save $94 billion. Even the White House doesn’t think so.
For 44 years families have achieved their higher education dreams with the help of guaranteed loans. They’ve benefited from consumer choice, superior service and life-of-the-loan default prevention programs.
Executive Director, America’s Student Loan Providers
Washington , D.C.