Part of the reason that so many students have graduated from college in the past 15 years is that FFELP lenders were there to take up the funding slack that Congress would not, could not or did not. Far more money was available for students through the private lenders than Congress ever bothered to come up with.

While Congress was apparently distracted with much more important matters, private lenders soldiered on. They developed unique and innovative lending products, ensuring that people who want to attend college have the money to do so. In addition, the FFELP lenders have competed with each other to offer borrowers the best deal possible.

This willingness to take up the matter where Congress left off (fifteen years ago) has now earned the ire of Congress, and the good men and women on the Hill want to make sure that you newly minted voters aren’t somehow left with the erroneous impression that they haven’t been paying attention to the problems of student borrowers in the past fifteen years.

Your Congressional representatives would hate to have you believe that they don’t really care about how you’re going to pay for college just because they capped the amount of Federal financial aid you could receive for fifteen years running while the cost of tuition exploded. They wouldn’t want you to come away from this issue with the thought that perhaps if Congress had been more responsible about financial aid funding in the past fifteen years that you wouldn’t be carrying as much debt upon graduation.

You see, your student loan balances are really not their fault. Congressional Democrats want you to believe they’re the fault of the people who actually loaned you the money to go to college in the first place. After all, if the FFELP lenders hadn’t loaned you the money to go to college, you wouldn’t have all of this student loan debt, right? The fact that you wouldn’t be going to college if you had to rely on Congress to help you out is neither here nor there.

Congress has proven itself to be rather undependable when it comes to financing student loans. The best they’ve managed to come up with is a broken Federal loan program, currently mired in a debt of more than $16 billion, in which most colleges and universities won’t participate. They are just now revisiting the cost of higher education, after 15 years of inattention.

Tell your representatives in Congress that if they aren’t going to do anything about the high cost of college tuition, you don’t want to rely on them to provide adequate funding for your college education. Tell them to restore the FFEL program and leave the business of lending to the lenders.

If you listen to Congressional Democrats, they say they are 100-percent committed to the idea of helping young Americans pay for a college education. On the surface, helping to pay for higher education makes sense. Many more people can attend colleges and universities, and later can fill a variety of demanding, rewarding, and high-paying jobs.

If you look at what Congress is doing, however, the story is a bit different. Congress last adjusted the Federal financial aid caps in 1992. In the mean time, the cost of higher education has tripled. Congress has made it more difficult to get Federal financial aid, by imposing regulations and restrictions on eligibility. Congress has passed 529 and 530 college savings plans, to encourage college savings by parents, grandparents and students themselves. Parents can start saving as soon as a child is born, and many do.

Congress is now reducing the subsidies paid to student loan lenders, who wouldn’t otherwise issue loans to students. Instead, your legislators want to herd you into a second-rate Federal program. If this iteration of the Higher Education Act is anything like the last two, we could be stuck with low lifetime lending caps, restrictions on grant sizes and no ability to reduce the interest rate we pay on our student loans for years.

It seems as though Congress would like to get out of the business of college lending altogether. Congress has hijacked the FFELP, and stripped it of most of its Federal subsidies. Once everyone is forced into a single lending program, there’s nothing to stop Congress from reducing funding to the FDLP, or perhaps eliminating it altogether. With no viable alternatives for getting money for college, college enrollment will drop.

The FFELP has tripled the US college graduation rate. Think about it. Why else would Congress break a mechanism that’s worked for more than 40 years? By not increasing Federal financial aid in a way that’s kept pace with the rise in tuition for the past 15 years, Congress has effectively reduced Federal financial aid to needy students. At a time when this country needs more highly educated and talented people, Congress is doing something that will reduce access to a college education for many American students.

This sinister hijack seems more like a plan to “wean” us from Federal financial aid. If you or your parents don’t save enough money to pay for college outright, and can’t secure enough scholarships and non-Federal grants, you may not be going to college. Is that what you want? The Congressional Democrats are luring you in with promises of lower interest rates, which they won’t deliver. Remember, high interest rates aren’t the problem. They’ve made it harder to get Federal financial aid; they want you to pay the administrative costs of their program out of your pocket; and they’re pushing college savings plans like they’re chocolate. Congress wants out!

Tell your Congressional representatives that they have a duty to the country and to its people to support the aspirations of talented students. This country needs a strong, diverse student loan lending program to support its college students.

The Congressional Democrats don’t like the choices you’ve been making lately, so they’ve done something about it. It seems that a lot of you student loan borrowers have taken advantage of student loan consolidations, interest rate reductions, and fee waivers offered by FFELP lenders, and Senator Kennedy and Co., don’t really appreciate that.

Congress’ new plan to reform student loans will do away with loan consolidations, interest rate reductions and fee waivers.You won’t have the FFELP’s professional customer service, borrower education programs, loan repayment assistance, forbearance, extensions, extended repayment terms and sometimes – outright loan forgiveness. FFELP lenders won’t be competing for your loan business, so you won’t be getting better interest rates. You didn’t mean to choose those as a better deal over the Federal loan program, did you?

Under Congress’ plan, you’ll still have choices to make. You may still get to choose your lender; there just won’t be quite as many lenders to choose from. Most FFELP lenders can’t break even under Congress’ new plan, so they won’t participate. That’s good because that will narrow down your choices quickly. You’ll have a choice of two lenders per state. Two. That’s choice, right? One or the other? Technically, it’s choice.

Actually, there’s a good possibility that your state won’t have two lenders that want to write student loans anymore. You might only have a choice of one lender. That’s still choice, because you could choose not to borrow money to get through college. Technically, you still have a choice when there’s only one lender in your state.

There is also the possibility that all lenders in your state won’t want to write student loans anymore, so Ed will assign you a lender of last resort. I know that doesn’t sound like much of a choice, but you could choose not to go to college. That’s still choice, right? You freely choose not to go to college because you can’t afford to go. You’ve made a fiscally responsible choice to forego college on the basis of affordability.

Without student loan consolidations, you may have as many as three lenders you’ll be making payments to if you pursue an undergraduate degree. You may have four, five or even six lenders if you go on to earn a professional degree. That’s another example of the choice under this program. Who are you going to pay this month? If you’ve got a half-dozen loans to keep track of, and you can’t get discounts on any of them, and you can’t consolidate to get a single payment, you might actually have to choose which bills you pay in any given month.

Tell your Congressional representatives to restore your choice in lending. Tell them you would prefer the choice you have under the FFELP program, and you don’t’ want to get stuck in a program that doesn’t provide you with the opportunity to make the best choice for your particular situation.

One of the most positive aspects of the current student loan program is the flexibility it offers. Students whose financial aid package does not cover their costs can borrow funds to make up the difference. Additionally, students who want to pursue advanced degrees are not limited by lending caps.

All this will change, however, if the measures passed by Congress are signed into law. Tuition at our nation’s universities is soaring, with no end in sight. Congress has been irresponsible, ignorant or just plain apathetic about these costs for the past 15 years. Not once during that period did they adjust the Federal financial aid caps. Instead, private lenders were called upon to fill in the gaps that Congress’ inattention created.

Congress has quite ably demonstrated that they can walk away from the whole higher education funding issue. They’re quite happy to let the matter sit while the cost of tuition goes through the roof. To accommodate the rising cost of tuition, Congress did absolutely nothing of note in the past fifteen years. They placed the burden of tuition increases squarely on e backs of the student borrowers.

The FFELP lenders, on the other hand, developed flexible, fair and generous loan products to assist students in finding the money they needed to attend college. The FFELP lenders were ready to pick up the slack when Congress nodded off. Now that an election is looming, Congress has once again awakened and your representatives and senators want you to know that even as they slept, they felt your pain. Really, they did.

The program that Congress has authorized will eliminate choice in lending, and will also take the flexibility, innovation and generosity of the FFELP lenders along with it. Many of the FFELP lenders who participate in the program now will no longer be able to write student loans. The lenders you’ve come to know and trust will be out of the program. 

Industry analysts believe that only a few large lenders will survive. Are a few large lenders a good substitute for many smaller ones? The smaller lenders are the ones who most keenly feel the need to compete. They have to distinguish themselves and their products to compete effectively against the larger lenders, who have the benefit of volume. Once you remove the small lenders from the program, you’ll have a few large lenders who don’t need to compete for business, and the Federal government, which wouldn’t know competition if it came up and introduced itself.

A non-competitive student loan industry is not in the best interest of consumers. Call, write or email your representatives in Congress and tell them that small, competitive lenders are the key to a successful student lending program.

Congressional Democrats want to reduce the amount of debt students hold when they graduate from college. Unfortunately, they’re not planning anything that will attack the problem at its source. Instead, Congress has chosen to attack the solution that’s put 50 million American students through college since the mid-1960’s.

If Congress succeeds in putting its plan into action, student loan costs for American families will rise. Why would Congress push a plan that will take more money out of your wallet? Good question, and it’s one that you should be posing to your Congressional representatives.

Eight out of ten students use the lending programs run by the FFELP lenders. 90 percent of colleges and universities participate in the FFELP lending program, and more than 80 percent participate in the FFELP programs exclusively. There’s very little possibility that you won’t be affected by this student loan legislation, and the end result is that more money will be coming out of your pocket.

Right now, the FFELP lenders use subsidies to waive fees and fund discounts on student loans. Discounts on the interest rate charged are given when borrowers sign up for electronic payments, or to reward responsible repayment. If you make timely payments over a certain period of time, lenders will sometimes reduce your loan interest rate.  According to the rules of the program today, lenders can do that as a way to encourage repayment, help borrowers avoid default, and reduce the overall cost of borrowing.

Under Congress’ plan, all that will change. There won’t be any more incentives for borrowers. Borrowers will be paying all loan origination fees, which FFELP lenders often waive currently. Borrowers won’t receive any interest rate deductions because the new legislation outlaws that.

Additionally, the FDLP plan, which Congress proposes as a substitute, will not pay for any of its administrative costs, so colleges and universities will have to shell out to cover those.  (Right now, those costs are paid for by the subsidies that Congress is so hot to cut.) The colleges and universities will pass those increased costs…and they are significant…along to the students in the form of tuition and fee increases. This plan will actually increase tuition, causing students to borrow more to pay for higher education.

Congress needs to concentrate on the real problem, which is the out-of-control increase in the cost of tuition. Right now, the only plan they’re talking about doesn’t address the cost of tuition, and guarantees that the cost of higher education will rise.

Tell your Congressional representatives and senators that you’re not interested in a shell game that simply shifts the administrative cost of government student loans onto the backs of student borrowers. Tell them to attack the real problem: the rising cost of tuition.

Grandstanders like Andrew Cuomo would have you believe that all student loan lenders are corrupt. He delights in circulating press releases about how many institutions he’s talking to about student loan lenders. His “investigation” has gone far afield, and while it may grab headlines, he’s an obvious shill for the Congressional Democrats’ agenda.

The truth is that most FFELP lenders are not corrupt, greedy corporations involved in back-room deals designed to snare unsuspecting students into a lifetime of insurmountable debt. Most FFELP lenders are local and regional banks, and non-profit loan agencies established to meet the higher-education financing needs of students in a particular state. In some cases, FFELP lenders are distinguished national corporations that have served the lending needs of individuals and businesses, and provide federal and private student loans as some products in their large lending portfolios.

It’s very easy for Andrew Cuomo to demonize lenders on his McCarthy-esque crusade, but the reforms passed by Congress will trigger some truly frightening consequences. Most current FFELP lenders will no longer provide student loans. This fact, by itself, should scare you. Why?

2007 marks the first time in 15 years that Congress has increased the lending and grant caps for federal student assistance. I’m sure that “saved” a lot of money, but Congress didn’t cap increases in tuition, so the cost of going to college has gone through the roof. Congress’ refusal to adjust the Federal financial aid caps meant that students had to find the money somewhere. They turned to FFELP lenders for assistance and the FFELP lenders came through. If Congress nods off again for 15 years, and forgets to (or refuses to) increase the lifetime lending caps on federal student loans and grants, you could find yourself screwed right out of a college education.

The reliability of the FFEL program is going to change under Congress’ new plan. Students have no guarantees that the funding Congress will provide will be sufficient to help them through college, and most FFEL program lenders won’t be around to help, if Congress gets its way. Students who can’t find the money to get through a degree may be forced to extend their studies by dropping down to part-time status, which may trigger loan repayment terms and make it exceedingly difficult or impossible to finish a degree.

Students might also look toward more risky loan products to finance their college education, which could raise the total amount of debt a student owes. Parents may be forced to take on additional debt, and may end up paying off more expensive student loans they’ve co-signed for their children, if their children can’t or don’t pay back their loans.

In all, Congress’ deal is a bad one for student borrowers and their families. Tell your representatives in Congress that you’re not interested in a program that destabilizes the funding mechanism you’ve come to know and trust.

It seems that our Canadian neighbors are also struggling with the question of student loans. They have a student loan program that is fully funded by the Government. Before you get too excited, it has a default rate of nearly 25 percent and the government spends more money trying to collect on bad debt than the debt is worth, but that’s a different story.

The Canadian students want an ombudsman to help mediate disputes between the Canadian Student Loan Program and the borrowers. It seems that the problems in the Canadian plan are many and the solutions are few. (The Canadian plan, by the way, is similar to what the Kennedy crew proposes for student loan borrower in the US.) Students who can’t get the government to resolve problems are stuck because they have nowhere to turn.

Don’t fret. The US Federal student loan programs have an ombudsman already. The office was established in 1999 and now receives an average of 300 calls per week. If 300 calls per week is average, then the Ombudsman’s office gets nearly 16,000 calls per year. That, by the way, is to handle only the Federal student loan programs, about 11 percent of all student loans issued in the US.

If you layer the additional 89 percent of student loan borrowers on top of the 11 percent already handled by the Ombudsman’s office, and the number of problems that required a call to the office stays constant, the Ombudsman’s office can expect to receive about 12,000 calls per month under Congress’ new plan.

Forget for the moment that Congress hasn’t equipped the Ombudsman’s office to handle that kind of call volume. Do you really want to participate in a program that generates 12,000 problem calls per month? Unfortunately, you’re not going to have much choice. Senator Kennedy wants to railroad you into his broken plan, so you’re going to be dealing with the Ombudsman and his 12,000 phone calls per month when you have problems with your loans that need to be resolved.

Tell your Congressmen and Senators that this nonsense plan isn’t the kind of relief you had in mind. Let them know that you don’t really want to wait in line behind 12,000 other people to get your problems resolved.

Congress is planning to gut the Federal Family Education Loan Program (FFELP) when it returns from summer break. Legislators claim that they’re going to increase the funding available to the neediest students, but really they’re playing a shell game. To increase the amount of Federal aid that’s disbursed in the form of Pell Grants, they need to de-fund other Federal programs that make aid available to other students. The bottom line for students is that finding financial aid is going to get harder.

Congress plans to take a big chunk of funding away from students who use the FFELP program. (Keep in mind that 8 out of 10 students use the FFELP loans to help pay for their education.) Yes, Virginia – you’re about to lose your student loans. But fear not, because the government has a plan.

The plan is to eliminate most of the private lenders from the student loan program, and to restrict private lending to no more than two lenders per state.  This “auction” system proposed by the Kennedy crowd has never been tried before, and promises to wreak havoc on the financial aid system that prospective college students and their families have been planning for years to use when the time to fund a child’s education comes along.

Who are these changes going to hurt the most? They’ll hurt the students who depend upon student loans to get through college. Sure, Congress talks about increasing the maximum Pell Grant, but guess what?  Increases in the cost of tuition will eat up most of the expanded grant amount. In fact, the Pell Grant awards haven’t been increased in several years, meaning that they no longer cover a significant percentage of a student’s college tuition, as they did when they were first introduced.

Increasing the Pell Grant amount by a few hundred dollars at the expense of a working student loan program isn’t the answer. Tell your representatives and senators that you need a working, dependable student loan program to finance college.

In Michigan, college tuition at that state’s four-year public universities has increased a whopping 57 percent in the last five years. Would you like to know how much the maximum Pell Grant award has increased in the same time period? $0. That’s right. Not a dime. Would you like to know how much of an increase Congress is now proposing for the Pell Grant? Less than $300 in the first year, and $200 per year through 2012. And last year’s average Pell Grant award was $2, 354 – down nearly $300 from 2002-03’s inflation-adjusted levels.

The good news is that Congress doesn’t plan to get caught sleeping again. They want to increase the maximum Pell Grant amount by a very generous $200 per year. Someone needs to tell the honorable men and women in Washington that a single text book can cost more than $200 these days.$200 isn’t going to cut it. What’s going to fill the gap between the enormous cost increases and federal financial aid programs that aren’t keeping pace with reality? Nothing, if Congress has its way.

Congress plans to remove most of the FFELP lenders from the student loan lending program, and replace them with a government-run program that claims to meet the needs of students? How can such a program meet the needs of students, when Congress isn’t paying attention to the spiraling costs of tuition?

How do I know that Congress isn’t paying attention? Congress has been decreasing Federal financial aid in the past few years. As college tuition skyrocketed, was Congress there to help? No. In fact, by doing nothing, they made it harder on American families to make ends meet and to find the money for their children to attend college.

In contrast, private lenders worked hard to make up the difference for America’s working families. The FFELP lenders were there, as they have been for the past 40 years, while Congress was nowhere to be found. Where was Senator Kennedy when the costs of tuition were rising so steeply? Was he advocating for increases in the Pell Grants then? No. Was he looking at the reasons college tuition has increased so sharply? No.

This is all political window-dressing at the expense of student borrowers. When students are stuck trying to make Senator Kennedy’s broken system work for them, will the good Senator be anywhere around? Don’t bet on it.

Tell your representatives and senators in Congress that you don’t want to get stuck with Senator Kennedy’s broken plan for 15 years while Congress takes a nap. Tell them to address the real issue, which is the rising cost of tuition.

Congress has passed a series of “reforms” for the Federal student financial aid system. If the reforms are signed into law, relying on them to help finance a college education could be dangerous. Congress has mapped out the “plan” for a new student financial aid system well into the future, but they can only fund programs for a few years at a time.

Congress hasn’t committed to funding this program in the long-term, which means that if you are saving for a college education and part of your plan includes loans, you could end up on the short end of the balance sheet if Congress decides to change its funding plan, or if student loan aid funds get cut or redirected. Worse than that, Congress plans to dictate which lenders can and can’t participate in the student loan lending program. You may get stuck with a lender you’ve never heard of and if another lender offers a better deal, you may not be able to take advantage of it.

Most American college students rely on loans of one sort or another to help finance their college educations. The student loan lenders in the US have worked in partnership with the federal government for more than 40 years to develop a system that helps the largest number of students. Statistics show that the system is working.

The original goal of Congress in 1965 was to increase the number of college graduates in our country. At the time, about eight percent of high school graduates went on to college. The President and Congress recognized that if American prosperity was going to continue, the country needed a steady supply of college graduates. To ensure that supply, Congress initiated the FFELP.

Now, Congress wants to change the deal. They’ve lost the vision that President Johnson espoused in 1965, and the groups that will be most hurt by these changes are the students from low- and middle-income families. Congress wants to redirect funds from the FFELP program to other aid programs, but only a small number of students qualify for the programs that Congress will be redirecting these funds toward. Most students who now receive aid through the FFELP programs will be shut out.

If Congress wants to help college students, it should take steps to reduce the amount of money a student has to borrow either by substantially increasing the amount of aid it provides and the number of students the Federal programs serve, or attacking the root causes of the double-digit tuition increases we’ve seen in the past several years. By reining in tuition increases, Congress could increase the number of students who can attend college, decrease the overall cost of college for students, and decrease the amount of student loan debt a graduate carries, if only they would focus on the real issue. Instead, they choose to attack the one functional solution they’ve managed to draft in the past 40 years.

Tell your representatives and senators that they should not attempt to fix what isn’t broken, and instead, they should concentrate on reducing the overall cost of college by addressing the high cost of tuition.

Congress wants you to believe that these changes it has planned for the student loan lending program are not going to have a big impact on you, the borrower. If you do a quick search on the news headlines, you’ll find a lot of articles that say just this.

Don’t believe it. The impact on borrowers will be “swift, certain and severe.” First, aid that used to go to the majority of student loan borrowers will now go to fund the paltry increases in Pell Grants for low-income students. Eight of ten students rely on FFELP lenders, and Congress plans to redirect that money away from the majority of borrowers. If your family income is more than about $40,000 per year, there will be less Federal aid available for you. Sorry, but that’s the price of being “rich.”

The number of participating lenders will be reduced from hundreds to maybe as few as ten. Most FFELP lenders will be thrown out of the program by the untested, as-yet-to-be-developed auction called for under the Kennedy plan. The largest lenders may possibly be able to survive, but most lenders will find that their already slim margins (as little as $0.04 for every $10 loaned) will be cut beyond the point where it’s viable to participate in the program at all.

The amount of aid offered by the Federal government will not cover the wild increases in tuition seen at many public colleges and universities. There will be a growing “unmet need” which represents the difference between the cost of tuition, room and board, books and other supplies, and the amount covered in the financial aid package.

With no FFELP lenders to turn to, parents and students will be forced to consider using high-cost credit cards and other riskier loans to cover the gap in aid. As the gap grows, so will the reliance on risky borrowing practices. This will jeopardize the financial stability and well being of students and their families, and reduce the overall access to higher education.

This legislation that Congress has passed is a bad idea, one that will put middle-class American families at risk. It doesn’t have to be this way. Contact your representatives in Congress and tell them that the student loan “reforms” are not worth the consequences they’ll bring. Tell them to address the real problem, which is the high cost of college tuition.

Senator Kennedy and Co., want you to believe that they’re saving money by taking it away from the evil hordes of FFELP lenders who are circling like sharks and who are making money hand over fist off of the backs of innocent students. It’s easy to hate the FFELP lenders because, according to Kennedy, they’re all out to rip off students.

The truth about Kennedy’s plan is that it cuts the FFELP lenders’ profit margins on students loans in half – from $0.04 per $10 to $0.02 per $10. Yes, you’re reading that correctly. $0.04 per $10. One penny per $2.50 in loans. According to Senator Kennedy, that one penny is far too much profit. If a student takes out a $5,000 loan, the lender will make $20. Kennedy wants to cut that in half because $20 in profit is apparently scandalous.

If Kennedy really wanted to save students money, there are many productive ways he could make this happen. The reality is that Kennedy has a political axe to grind with the FFELP lenders. Cutting their profit in half isn’t going to do one thing to lower the cost of college tuition. It will, however, make it more difficult for students to find the college funding they need.

You see, the FFELP lenders are, for the most part, honest and fair. They’re not some faraway corporate entities you’ve never heard of; they’re your local banks and credit unions. They’re the ones who will be cut out of the program, and the faraway corporate entities will survive.

If you’re saving for a college education for yourself or someone else, be sure to thank Senator Kennedy when you find out you don’t have enough saved for college and you can no longer get a loan because your local lenders no longer offer them.

The student loan programs have a feature that most borrowers like and appreciate after leaving college: loan consolidations. Borrowers can consolidate all of their student loans once their six-month grace period has expired and their loans have entered repayment. What’s not to like about it? Students can get a better interest rate, a better payment structure, a single payment, and a longer payoff term, if they desire. Students save money when they consolidate their loans.

Congress wants to save students money too. Just not through student loan consolidations. Congress’ new plan effectively terminates a student’s ability to consolidate student loans. That’s an unusual approach for a body that claims to want to save students money, isn’t it?

Senator Kennedy and Co., don’t really want to you save money on your student loans. If they did, they would not have deliberately made it so difficult for students to consolidate loans. They say they want to save students money, but at the same time, they’ve taken away one of the best opportunities students have to save money on their student loans.

Loan consolidation is the one area of student loan lending where the borrower can really reduce not only his immediate payment, but also the amount of interest he pays over the lifetime of the loan. Consolidation offers the opportunity to adjust payments to fit the salary a graduate earns in his first job out of college.

Yes, the amount of money a student borrows to get through college has gone up substantially in the past several years, but ask yourself this: what does the principal sum have to do with the interest rate? Not much. Halving the interest rate isn’t going to change the amount a student borrows one iota. If Congress really wants to help students, they should work to decrease the amount of money a student has to borrow, and let them make the best deals they can to consolidate their loans after college.

Student borrowers have the ability to consolidate loans now, but if this program is signed into law, students can forget about consolidating loans to save money. This will increase the number of entities to which a student has to make payments, and will also increase the likelihood that a student will default on his loans.

If that’s not the kind of “help” you had in mind, tell your senators and Congressional representatives that you want real help in the form of increased tuition grants, and you want to preserve the ability to consolidate your student loans.

Macleans, the Canadian news magazine, reports that the Canadian government is paying 12 collection agencies $181 million for “chasing down” $100 million in interest on $800 million in government-issued students loans that are in default. The default figures represent 180,000 non-performing loans.

According to critics, the recovery costs represent wasted dollars that could be spent on funding student borrowers who genuinely need the money. The Auditor General also says that the government’s use of private collection agencies poses problems, because there is no mechanism to ensure the private collectors comply with the policies of the Canada Student Loan program. The Canadian government has serviced all of its student loans made since 2007. That’s right, the program has accumulated $800 million in default loans in just seven years.

This is exactly the situation the US Federal government will be facing if the current student loan reform legislation is enacted. The Canadian Student Loan program is not remarkably different than the US Direct Student Loan Program, and the results of this fiasco are not going to be remarkably different, although they will certainly be on a different scale.

The FDLP was in debt to the tune of $16 billion dollars as of 2005. The debt has grown since that time, and shows no sign of improvement. From the Canadian example, you can see that the cost of pursuing defaulted borrowers is high – almost 25% of the amount owed. The only effective way to collect such debt is by turning to the private sector.

Kind of ironic, isn’t it? In order to keep the program out of the hands of the private sector, the government wants to take over student loan lending. When the debt rate goes through the roof, the government will turn back to the private sector to get some fraction of your money back. Where is the savings in that scheme?

We don’t need to re-invent the wheel here. We have a working example of exactly what is going to happen when the US adopts the same backwards student loan scheme the Canadians did. Right now, the US has a workable program that provides sufficient capital for all borrowers, has an element of self-sustenance, and has one of the lowest default rates in the program’s history.

Please, tell your Senators and Representatives that we could stand to take a lesson from our Canadian neighbors, and we don’t need to take the same failing path that they’re on. Tell your Congressional representatives to study the Canada Student Loan program and take a good long look at what they’re signing us up for.

On Friday, August 10, Governor John Hoeven of North Dakota declared it to be “Student Loans at Bank of North Dakota Day” in honor of the Bank of North Dakota’s exemplary role as a student loan lender in that state. The BND claims that it was the first institution to issue a federal student loan, and BND has issued more than 200,000 student loans worth more than $1.8 billion since the program’s inception.

The Bank of North Dakota, like many other student loan lenders, is an integral part of its community. Judging by the loan volume over the past 40 years, the statewide community in North Dakota wants to deal with its own banks and lenders. There is value in working with a lender that you know and trust and North Dakota has a real investment in the training and education of its students.

North Dakota is feeling the pinch of losing its young people to other states. Agriculture, for example, is one of North Dakota’s primary economic engines. Agriculture is about much more than simple farming, and it requires highly skilled and educated individuals to keep the engine running smoothly. North Dakota has a big investment in training its young people because North Dakota’s agricultural industry depends upon them. North Dakota also needs young people to fill the thousands of other opportunities that are available in North Dakota each year.

Like many other “northern tier” states, North Dakota is a hard sell for people who weren’t born there. North Dakota isn’t at the top of most peoples’ lists when they’re looking for opportunities for themselves and their families, so it’s critical that North Dakota keep the young people it has. That’s exactly why the Bank of North Dakota has been making student loans for 40 years. Its loan program is an investment in North Dakota.

For the Bank of North Dakota, making student loans is not about defrauding its customers. It’s not about making a quick buck off of the Federal government. It’s not about gouging borrowers with “high” interest rates. It’s about building the community in North Dakota. It’s about a local bank investing in its own community. It’s about delivering what North Dakota’s industries need most: talented, educated people. To suggest that the Bank of North Dakota has any other motive is insulting to both the bank and to the people who have benefited from the Bank’s lending program.

The Governor of North Dakota recognizes the value that a local lender has provided for his state, but the people in Washington sure don’t. Each state has its own local student loan lender, and under the new legislation, most of those lenders won’t be participating in the student loan program anymore.

Call your Congressional representatives and Senators and tell them that they’re making a big mistake by throwing lenders like the Bank of North Dakota out of the program. Tell them you want to preserve your choice in lending.