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McKeon comments on Democrats' vote to nix FFEL program

Posted: September 17, 2009 8:28 p.m.
Updated: September 17, 2009 11:59 p.m.
 
WASHINGTON, D.C. - Rep. Howard P. "Buck" McKeon (R-Santa Clarita) issued the following statement today upon passage of H.R. 3221, the Student Loan and Fiscal Responsibility Act, which eliminates the Federal Family Education Loan (FFEL) program and replaces it with a system of government-run lending directly from the U.S. Treasury:

"With passage of the Student Loan and Fiscal Responsibility Act today, the Majority moved to eliminate the Federal Family Education Loan Program, a program that has been in place since the 1960's and has successfully allowed millions of students to further their education.

In contrast to 40 years of success under FFEL, the federally-run Direct Loan program has only been around since 1992. It was supposed to ‘compete' with the private option. Included in the program was a subsidy to schools that participated in the new program; an incentive. It didn't work. The highest percentage of the student loan market that Direct Loans ever commanded was 34%.

Despite the limitations of the federally-run Direct Loans, the Majority voted to shut the more successful FFEL program down and consolidate the entire federal student loan program into the Direct Loan program.

For some reason, Democrats believe that with all of the different types of lenders out there - from mortgage lenders, to small business lenders, to consumer lenders - it is student lenders that are ripe for a federal monopoly.

So to those who claim the FFEL program does not work, I would only ask you to look back on the last 40 plus years before the credit crisis that crippled our entire financial system. The private sector is and has been a stable source of capital - it's one that has served millions of students and families for decades. Instead of trying to keep private capital and innovation out of student lending permanently, perhaps we should be looking for ways to bring it back.

The federal government has its hands in the financial services industry, the insurance industry, the auto industry, and now wants to get its hands on the energy industry, medical industry, and the student loan industry. Not to mention a plethora of new Czars with no accountability to the American people. Saddling taxpayers with close to $50 billion in additional risk and stripping them of their freedom to choose how to best fund their education is completely irresponsible.

And I find it truly remarkable that at a time when the federal government should be helping create a climate conducive to job growth that they would choose to eliminate an entire private industry that helps students, employs over 35,000 people, and is much more effective than a government run program."

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