“Tomorrow, East Bay Rep. George Miller introduces the Student Aid and Fiscal Responsibility Act, which gives over the $100 billion-a-year guaranteed student loan program entirely into the hands of the feds.
Banks like San Francisco’s Wells Fargo & Co. could be shut out from their long-standing involvement in the student loan program.
There will be (a) resistance to what some will see as the next step in our march to socialism; (b) concern that the scheduled July 2010 changeover is too soon to be absorbed by the 4,400 or so colleges affected; and (c) suggestions that a private sector component side-by-side with the government program would make for healthy competition, thereby enhancing the program’s effectiveness.
Don’t bank on any of the above to alter the bill’s trajectory.
In a statement, Wells Fargo said it believes the changes “will have unintended consequences that are not in the best interest of the students and their families.” It did not elaborate on those consequences, including what they might mean for Wells, which has been one of the more prominent banks in the student loan business.
John Dean, counsel for the Consumer Bankers Association said private banks are probably relieved to get out of the origination part, which, in these credit crunch days, has become more trouble than it’s worth. Besides, fees earned handling student loans are small potatoes on most banks’ balance sheets, including Wells’, he believes. Bank critics say such fees have been more lucrative….”
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