This is perfect. Just in time for the election season, banks like Citibank and JPMorgan Chase
are demonstrating that they're in the student loan business not to help people go to college, but to make a buck. They're dropping community colleges and for-profit colleges from their rolls as the credit markets tighten.
On the one hand, you can't fault banks for acting like businesses, because that's exactly what they are. Loans to low-income students at lower priced colleges tend to be smaller, representing less profit for the same amount of effort to the lender, and they may have higher default rates, especially in the case of for-profit "career colleges".
On the other hand, why in the heck did we put profit-seeking businesses in the middle of the student aid process in the first place? Taxpayers guarantee 97% of these banks' money, and yet at the slightest increase of risk, lenders are leaving needy students in the lurch and forcing them to find new loans. A better alternative exists: the federal direct loan program. By expanding that program, in exchange for increasing that guarantee from 97% to 100%, we would be guaranteeing one, simple, dependable, affordable option for all students who need a loan to go to college.
One community college financial aid person I spoke to today said she was considering switching her school into the direct loan program for all these reasons. I predict more colleges will follow, and that will be a good thing for students. Taxpayers will benefit too, because the direct loan program is cheaper without the trouble of subsidizing businesses that will leave when the going gets rough.