An advocate for the private loan industry sends me this note, and it rings true to me:
“Last week, by a vote 414-3, the House of Representatives passed the Student Loan Sunshine Act of 2007. Introduced by Rep. George Miller of California, the bill places myriad disclosure requirements on private student lenders with regard to their financial dealings with colleges and universities. Disclosure and transparency requirements should be applauded. But they should also be applied equally.What has not been reported about this bill is that it specifically exempts the Federal Direct Loan Program from the same disclosure requirements. The FDLP is managed by the Department of Education and has lost nearly fifteen billion dollars in fifteen years. Students who attend colleges that only participate in the government’s program get loans that are more expensive than students who attend schools that participate in the Federal Family Education Loan Program (FFELP). A recent story in the St. Louis Post-Dispatch illustrated how University of Missouri-Columbia students are shut out of other, perhaps low-cost loans, because the school only participates in the Direct Loan Program and does not allow students to shop for loans with private lenders.”
(Quin talking again:) Anybody with pro-free-market sensibilities should, it seems to me, immediately grasp the significance of this. It makes no sense whatsoever NOT to impose the same disclosure requirements on a government program that are placed on private enterprise. The Senate should fix this by eliminating the provision exempting the FDLP from the disclosure requirements. And President Bush ought to insist that the provision be removed.
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