The Congressional Democrats say that they can save you money by simply eliminating the subsidies they pay to FFELP lenders. They can certainly cut the line item on paper, but they can’t reduce the cost of the program. Despite what they want you to believe, adding more students to the program is only going to make things worse. The government has always tried to foist off the cost of administration onto the colleges and universities. That’s why the participation rate in the FDLP is so low. The major problem with the FDLP is that the government has made it absolutely clear that it expects something for nothing.

Now, under the Kennedy plan, colleges and universities won’t have a choice. If they want to accept federal student aid, they’ll have to participate in the FDLP. At some point, colleges and universities may decide that they can no longer accept Federal aid because taking it means that they take a loss, or they must pass the increased costs on to their students. Either way, the students lose.

There’s no bright spot for the students in this program. Choice of lender is gone. Caps and lifetime limits on loans and grants mean that even needy students won’t have enough money to go to school. Colleges and universities may decide that it’s too expensive to accept Federal aid, and there’s no guarantee that the long-term funding of the program is even stable.

Kennedy’s plan authorizes these reforms to exist for five years, but only funds them for two years. And there’s no protection to ensure that the money diverted from subsidies will continue to be used to fund student grants and loans. Even if it were, $18 billion isn’t anywhere near enough money to increase participation in the program, increase caps and restrictions, provide new financial aid funding for students and maintain solvency.

The FFELP lenders must make things look easy, because when the Congressional Democrats look at the FFEL program, they think that the Department of Education is up to the task of running a program that provides the same program benefits at a much lower cost. When everyone else looks at the FFEL program, they see a well-run solvent program that provides lasting benefit and a good return for the taxpayer’s dollar. This is more than just perception, however. The facts back up the success of the FFEL program.

FFELP lenders know how to manage money. The government, on the other hand, knows how to borrow money. It knows how to print money. Evidently, it is also very good at wasting money. I have yet to see a government agency, however, that knows how to manage money. Until the government can demonstrate that its results are better than those achieved in the private sector, however, as a taxpayer, I’d rather have my money in the hands of someone who knows how to take care of it, spend it wisely when necessary, and invest it in all other circumstances. Tell your senators that the government doesn’t belong in the business of lending. The government should leave lending to those who built the program and understand how to make it work for everyone.

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