Increasingly it looks like the combination of a credit crisis and Democratic leadership will do away with the FFEL (the lender-based student loan program that is more costly for taxpayers), saving up to $94 billion over 10 years that could be used for the Pell Grant. Even Sallie Mae is sorta playing ball.
But in attacking the FFEL program, the Department of Education has committed a gaffe (defined as "a politician accidentally telling the truth.")
"Education Department leaders repeatedly describe the guaranteed loan program as being "on life support," which strikes some loan industry officials as hypocritical since the White House boasts in many other settings that its efforts to shore up the financial industry have been hugely successful."
Let's not kid ourselves. The financial system as a whole IS on life support thanks to a free flowing IV drip of federal dollars, which ultimately swell the national debt that our grandchildren will be paying back. That includes the student loan industry, the mortgage industry, and the credit card industry.
I defer to those with greater expertise who say that this life support project is necessary in a broader sense; but for student loans, if a government department is in a position to take it over at less expense to taxpayers, let's do it.