The President's FY 2010 Budget proposal would eliminate the Federal Family Education Loan Program, effective July 1, 2010. At that time all new federal student and parent loans would be made by the Federal Direct Loan Program. Approximately 4,400 schools would have to switch programs. We invite financial aid professionals, parents, students, student loan professionals and concerned citizens to sign the following petition:
Taylor W. Hickem's personal statement on the issue:
We, the undersigned, respectfully urge the Congress to preserve choice and competition in the federal student loan program. Competition between lenders that make federally guaranteed loans and competition between the two major federal student loan programs have led to significant and continuous improvements in service levels and quality and borrower benefits that reduce loan costs for students and parents.
Therefore, we urge Congress not to accept the Administration's Budget proposal to eliminate the Federal Family Education Loan Program and to work on a bipartisan basis to preserve a stronger private sector-based federal student loan program that
Provides student and parent borrowers a meaningful choice of lenders,
Offers postsecondary institutions a meaningful choice of student loan delivery and servicing
Offers borrowers and postsecondary institutions the wide array of delinquency, financial literacy and default prevention programs that promote responsible borrowing and repayment and minimize defaults.
Taylor W. Hickem's personal statement on the issue:
My experience with student loans, federal and private, is that the private loans hands down offer better service in terms of interest rates, customer service, application process, and flexibility of loan terms. I do not enjoy dealing with the inefficiency of the federal loan process, with their non-functioning website that directs users to their phone service, and wait times on the phone service of up to 20 min.
Competition is the force that breeds quality.
For clarification, education is a public issue, and federal tax dollars should be spent on lowering the risk associated with investing in higher education. There are better ways to do that then managing the financing of these loans through the federal agencies.
There is nothing wrong with continuing to federally subsidize interest rates on private student loans, or alternatively to federally fund credit default protection insurance contracts for the lenders to reduce the risk associated with issuing unsecured loans to prospective and current college students.
The governments primary responsibility is to reduce the risk and encourage education funding from the private sector, not to administer the financing themselves.
The government is not a financial institution, this is not its core function. This is a waste of taxpayer money, and an inefficient way of funding higher education.
