My daughter has paid her student loans for 12 years and owes twice as much today as when she took those loans out.  Our youth will never get out from under the burden of those loans unless Congress removes power from the DOE--power it abuses today.  Interesting that the Bush Administration wants to forgive one of the student loan lenders, Nelnet, $300 million in overbilling of taxpayers, but goes after our youth with venom over minor amounts of money!

Let's undo this harm to our youth for they are the future of this country.

If Congressional Democrats buy this, they shouldn't even bother unpacking their boxes. 

What I don't understand is why the author promotes an auction proposal that, by her own admission, could very well result in Sallie Mae being one of a few dominant, remaining players?  Unless, of course, the real goal of the auction system is something else.

The New American Foundation has it mostly wrong and partially right since Mike Dannenberg has never made a student loan, parent loan, nor consolidation loan in his life.  His writings are ill advised and ill informed and reflect his complete lack of understanding of the Direct, FFELP, and HEAL loan programs.  Instead of trying to reform both the Direct and FFELP programs, both of which need reform to level the playing field between the two programs and within the FFELP program, Dannenberg has hijacked the New America Foundation as his baseball bat to bash the FFELP program and promote the establishment of Federal Government monopoly Direct loan program.  While you are at it Mike, why don't you socialize medicine, eliminate the insurance industry, and turn all Federal Government credit guarantee programs such as the VA, FHA, SBA, and Export-Import Bank into direct loan programs.

The reality is there is really no Direct loan program since the U.S. Department of Education hired a FFELP loan servicer to make and service the Direct loans.  And, it just happens to be the FFELP loan servicer with the relatively highest loan servicing fees (this begs the question why Direct loan advocates say the Direct loan program is cheaper to the taxpayers than the FFELP loan program). 

Students and parents at most of the schools participating in the Direct loan program are locked out of obtaining a loan with interest rate discounts (i.e., a FFELP loan cheaper than a Direct loan) from a FFELP program lender since the school and not the student nor the parents decide which of the two loan programs the student must use.  There is no freedom of choice. 

In the FFELP program, school officials steer students to a set of preferred OPIC-like cartel FFELP lenders and this practice should be outlawed entirely.  Some FFELP lenders (none of the new start up Consolidation Loan companies included) that issue tax exempt revenue bonds engaged in the 9.5% interest rate scam collecting unwarranted subsidies which should be returned to increase Pell grants.

The correct role of the New American Foundation is to promote debate about these needed reforms and not to take a NEOCON-like ideological position with no basis in fact in favor of a Federal Government monopoly Direct Loan program.  Dannenberg's arguments sound like flawed pre-war intelligence.

The only real competition to emerge in the FFELP program has been post 1998 with the advent of Consolidation Loan companies such as U.S. Education Finance Group.   No such thing as a borrower interest rate discount/borrower fee reduction or borrower benefit existed prior to 1998.  Borrower interest rate and fee discounts only emerged as a result of the competition from start-up Consolidation Loan companies (many of which later began making Stafford and PLUS loans) post 1998.  U.S. Education Finance Group and other new companies have saved millions of borrowers hundreds of millions of dollars in interest expense vis-a-vis the Direct loan program and the OPIC-like cartel of FFELP lenders that existed prior to 1998 that did not initially offer borrower benefits until spurred into it by the new Consolidation Loan companies. 

The auction proposal will result in NO competition within the FFELP program and a single FFELP lender with the lowest cost of funds and lowest cost of servicing.  As Senator John Glenn once said when he was a Mercury astronaut after his spacecraft's heatshield almost came off during the super heated re-entry, "the heatshield was made by the lowest bidder."  The auction process adopted by the U.S. Department of Health and Human Services resulted in semi-annual disruptions in the flow of HEAL student loan funds to medical professions students at the nation's medical and dental schools and ultimately resulted in the HEAL student loan program having one lender and one servicer (which were one in the same).  

The two programs need reform to enhance competition, rectify past abuses, and not a Dannenberg revolution.

Written by a leading member of the Democratic party, and President and Chief Executive Officer of U.S. Education Finance Group, a FFELP lender.

I am one of those American graduates victimize by Sallie Mae and my school.

I was never told how difficult it is to repay a private/alternative loan, and I was never inform that I did have the choice to apply for a federal loan with a lower interest rate. The students at my school are not given a choice. Everybody is thrown in to Sallie Mae's loans, and many don't even finish their degree, because by their third year they owe so much money they decide to quit. I could give a list of names of all the students at my school whose lives Sallie Mae is destroying.

I was forced to leave America and come to Europe to be able to repay my loans since the exchange rate is better from here to US dollars. I lost everything back at home and I cannot dream of coming back to America and living in America for many years. So much for my American Dream.

The one thing I don't understand is why American citizens are not doing anything. We are in the background hoping that someone in Washington D.C does something for us. I am not instigating or suggesting violence or disorder, but I know if it were happenning in another country, students would be having riots and protests.

I think Americans need to stand up for ourselves and say "that is enough"

Imagine, if you can, the uproar if homeowners were suddenly told that they can no longer refinance their homes.  Then consider how American students and their parents feel who are experiencing exactly the same problem with their federally insured student loan debt.

Seems the problem originated with mega-lender, Sallie Mae, and her cozy friend, Rep. John Boehner, who persuaded the 109th Congress to please Miss Sallie and forget about students and their parents.

While Sallie Mae pretends to have the best interests of their customers at heart, they covertly worked behind the scenes to pass anti-competitive legislation that is costing students and parents billions of dollars.

Under the laws effective on July 1,2006, the vast majority who have consolidated are now legally barred from ever re-financing again, no matter what other lender might have offered them a lower rate, better terms, and more manageable monthly payments.

Legally barred from ever refinancing? Hard to believe, but true. 

Here's "the short version," Sallie Mae doesn't want the lure of lower rates tempting their customers to switch to Sallie's competitors.   So, they called on Republican leaders, and got them to attempt to hide ugly anti-competitive legislation to prevent reconsolidation in the Budget Deficit Act of 2006.  Of course this ignored anti-competitive laws, stiffing student and parent borrowers in any number of costly ways.

And when consumer groups such as the American Student Association began complaining about the proposed no-more-refinancing law, Sallie Mae lobbyists countered by spreading misinformation that’s designed to lead people to believe that a borrower moving their loan from one lender to another would cost the taxpayers money that was needed in other places.  Not so.  The fact is, the borrower savings would all come from the smaller and less greedy lenders' willingness to accept less profit. 

In the end, Sallie Mae, which, according to Fortune Magazine, is one of America's most profitable companies, won the battle.  And the losers were America’s millions of students and parents who have been denied the opportunity to negotiate lower interest rates for themselves in an open market.

Now, the Democrats say they are going to do something about these issues.  They have proposed a 50% cut in student loan interest rates (Reverse the Raid on Student Aid Act; H.R. 5150 and the Senate's RSSA Act), and Hillary Clinton’s Student Borrower Bill of Rights (S. 3255) proposes to repeal the laws banning the refinancing of Federal Consolidation loans and other predatory lending practices. But there is no guarantee that either of these proposals will actually become law.

Voice your opinion on these issues by contacting your representation. It's up to you, now. 

C. Victoria Patrick

Educator, College Administrator, Financial Adviser (retired)

Thirteen years ago I graduated with a Bachelor's of Science Degree, my then husband also graduated. He had been a professional student and borrowed about $22000, I borrowed approximately $8000. Shortly after consolidating our loans in to one he left. During the course of our divorce proceedings he stated he would not assist in repaying this debt. I spent hours pleading with the powers at Sallie Mae to reverse our consolidation so that I might not be required to pay his debt. Of course I was given a resounding 'NO' to every bit of help I begged for. Consequently, thirteen years later I've paid $43,000 and currently owe another $27,500. I am raising six children and work two jobs to keep current my obligations. I couldn't have completed college without financial aid and am greatful for the loan. However, a little mercy from those who make the same amount of money in a week as I make in a year would be highly appreciated.

How do people like Fitzpatrick SLEEP at night?

In two years, my $50,000 Sallie Mae Loan has collected $11,000 in interest. That is ridiculous. At age 18, I did what my loan counselor-"the expert"-said was best...and now, two years out of college in a $30k a year job in television, newly diagnosed with type one diabetes...my bills and medical expenses exceed what I take home in a month. I'm talking my bank account is -$397.

Whenever someone younger than me discusses loans to pay for college-I direct them as far away possible from Sallie Mae. I wish someone had done the same for me.