Why Do We Need Banks (Again) for Student Loans?

The white collars at Sallie Mae are starting to get a little sweaty. First, the House of Representatives passed the new student loan legislation to reduce interest rates. Now Rep. Tom Petri (R-Wis) has introduced the The STAR Act (link here) which will help steer students toward Direct Lending as opposed to Sallie Mae. This is going to be a serious battle. As my source says, “Private lenders (Sallie Mae) are going send out their lobby in force. The industry is prepared to die on the hill. ”

The STAR act would also increase funding for Pell Grants, which is much needed. Gordon Smith (R-OR) and Edward Kennedy (D-MA) are cosponsoring companion legislation in the Senate.

So why do we need banks for student loans? Well that’s just it: we don’t. And now that this boondoggle is being exposed, private lenders are going to be scrambling for position in the political landscape.

One thought on “Why Do We Need Banks (Again) for Student Loans?

  1. I have been having a lot of problems with Sallie Mae. I am sending the payments, but they keep mis-applying the money. I started a website to help expose Sallie Mae because I’m losing the battle with them. They WON’T fix the problem, and it’s their fault!!!


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