Submitted by Washington Reader (not verified) on July 17, 2009 - 9:43am.
I must take issue with this statement: "The Direct Loan program has never required continuous, ad-hoc legislative tinkering and subsidy setting, nor does it invite the rent seeking, lobbying, and loophole exploitation that has led to so much waste and abuse in the FFEL program." Really? If you review the recent history of legislative action on FFEL, you will find that almost every bill or amendment was prompted not by "rent seekers," but by efforts to extract "savings" from the program because Congress and successive administrations appear unwilling to consider increasing Pell Grants an investment worth making without claiming to pay for it through student loan savings. Even those amendments sought by the student loan community--things like ECASLA--were prompted in part by damage done to FFEL by short-sighted and sometimes incompetent legislation produced by Congress and the executive branch.
And what about the Student Aid and Fiscal Responsibility Act? It includes troubling legislative language granting specific non-profit agencies servicing rights on Direct Loans even in cases where the borrower may prefer another servicer or where the Department of Education has contracted with another servicer at a lower cost. Here is what your own blog had to say about the provision: "The legislation would essentially give each and every one of EFC's members a no-bid contract to service the [Direct] loans of up to 100,000 student loan borrowers in their home states."
Frankly, Chairman Miller, Arne Duncan and Bob Shireman should be ashamed of writing a bill with this provision in it. And NAF should try to occasionally set aside your glee about the possible demise of FFEL and try to focus on the real issues involved. Is the Miller bill good policy? We're finding a lot of people in the higher education community--people who I would assume you would not consider "rent seekers"--question the abandonment of a Pell Grant entitlement, direct grants to one segment of higher education over another, and politicized student loan provisions in the bill.
I must take issue with this
I must take issue with this statement: "The Direct Loan program has never required continuous, ad-hoc legislative tinkering and subsidy setting, nor does it invite the rent seeking, lobbying, and loophole exploitation that has led to so much waste and abuse in the FFEL program." Really? If you review the recent history of legislative action on FFEL, you will find that almost every bill or amendment was prompted not by "rent seekers," but by efforts to extract "savings" from the program because Congress and successive administrations appear unwilling to consider increasing Pell Grants an investment worth making without claiming to pay for it through student loan savings. Even those amendments sought by the student loan community--things like ECASLA--were prompted in part by damage done to FFEL by short-sighted and sometimes incompetent legislation produced by Congress and the executive branch.
And what about the Student Aid and Fiscal Responsibility Act? It includes troubling legislative language granting specific non-profit agencies servicing rights on Direct Loans even in cases where the borrower may prefer another servicer or where the Department of Education has contracted with another servicer at a lower cost. Here is what your own blog had to say about the provision: "The legislation would essentially give each and every one of EFC's members a no-bid contract to service the [Direct] loans of up to 100,000 student loan borrowers in their home states."
Frankly, Chairman Miller, Arne Duncan and Bob Shireman should be ashamed of writing a bill with this provision in it. And NAF should try to occasionally set aside your glee about the possible demise of FFEL and try to focus on the real issues involved. Is the Miller bill good policy? We're finding a lot of people in the higher education community--people who I would assume you would not consider "rent seekers"--question the abandonment of a Pell Grant entitlement, direct grants to one segment of higher education over another, and politicized student loan provisions in the bill.