Submitted by AnonymousToo (not verified) on August 11, 2008 - 5:28pm.
"The measure does policy somersaults to provide more subsidies to lenders..." What? What new subsidies is NAF referring to? Can this statement be explained?
The Department of Education (and Office of Management and Budget) released a detailed cost/methodology analysis (http://federalstudentaid.ed.gov/ffelp/library/OfficialFedRegister_070108...) that clearly spells out how the law will be implemented at no net cost to taxpayers as REQUIRED BY LAW. Strike one.
The amount paid to lenders for these assets will ultimately be below what they are worth over their expected life, which means that the federal government will probably earn money on the assets they take ownership of. Even if this does not play out for all loans, the fact that lenders will be paying the government for liquidity will more than offset any potential cost on certain loans. That's why the Department picked the pricing it did, to ensure all of the costs were covered.Strike two.
Finally, how on earth can a scenario in which lenders PAY the government CP plus 50 for access to capital be characterized as a "new subsidy"? NAF should look up what the government is paying for funds (T-Bills) and reconsider how it is characterizing things. Strike three.
It never works to simply change bats and continue swinging for the fences with your eyes closed -- so a simple correction/clarification is a much safer course of action. Wouldn't want NAF to pull a muscle!
NAF: Don't Pull a Muscle
"The measure does policy somersaults to provide more subsidies to lenders..." What? What new subsidies is NAF referring to? Can this statement be explained?
The Department of Education (and Office of Management and Budget) released a detailed cost/methodology analysis (http://federalstudentaid.ed.gov/ffelp/library/OfficialFedRegister_070108...) that clearly spells out how the law will be implemented at no net cost to taxpayers as REQUIRED BY LAW. Strike one.
The amount paid to lenders for these assets will ultimately be below what they are worth over their expected life, which means that the federal government will probably earn money on the assets they take ownership of. Even if this does not play out for all loans, the fact that lenders will be paying the government for liquidity will more than offset any potential cost on certain loans. That's why the Department picked the pricing it did, to ensure all of the costs were covered.Strike two.
Finally, how on earth can a scenario in which lenders PAY the government CP plus 50 for access to capital be characterized as a "new subsidy"? NAF should look up what the government is paying for funds (T-Bills) and reconsider how it is characterizing things. Strike three.
It never works to simply change bats and continue swinging for the fences with your eyes closed -- so a simple correction/clarification is a much safer course of action. Wouldn't want NAF to pull a muscle!