Press Releases
Luetkemeyer Sides with College Students and Families, Rejects Takeover of Lending Services
Washington, DC,
September 17, 2009
U.S. Rep. Blaine Luetkemeyer (MO-9) today voted against the deceivingly named Student Aid and Fiscal Responsibility Act, which amounts to nothing more than a government takeover of student loan lending that will hurt students and their families.
U.S. Rep. Blaine Luetkemeyer (MO-9) today voted against the deceivingly named Student Aid and Fiscal Responsibility Act, which amounts to nothing more than a government takeover of student loan lending that will hurt students and their families. “Hard-working Americans are telling Congress that they do not want to see the heavy hand of government expanded, and then along comes this misleading bill. This bill could ultimately cost taxpayers billions of dollars,” Luetkemeyer said. “I could not in good conscience support this kind of damaging government interference, which will ultimately harm students, schools and the economy. I have discussed this measure with a number of my constituents and none of them support this takeover.” The bill is misleadingly named the Student Aid and Fiscal Responsibility Act and eliminates choice, competition and innovation in student lending. This legislation would eliminate the longstanding Federal Family Education Loan (FFEL) Program, a public-private partnership that has leveraged hundreds of billions in private capital to help students pay for a college education for more than 40 years. The legislation would eliminate the FFEL program and replace it with a government-run program beginning in July 2010. Approximately three-quarters of all colleges and universities have chosen to remain in the FFEL program because of technological innovation, borrower choice and customer service. The parallels to the health care debate are ominous. Just 16 years ago, the Direct Loan program was created as a “government option” to promote competition. Today, Congress is preparing to eliminate the private sector’s role in student lending. A switch to a government-run lending program will be bad for students, bad for schools and bad for jobs, particularly during this tough economy when states are still hemorrhaging jobs. This new government-run program will provide the bare minimum in services to students and families, while adding layers of bureaucratic red-tape and stacks of additional paperwork. The risk to customer service of switching to a single lender approach could create several disruptions for students and schools. A single lender system means that there is no student loan back-up system in place. In the event of an operation setback affecting the government-run student lending program, there would be no back-up, as there was in 1998 when the Direct Loan consolidation process collapsed and FFEL lenders were willing and able to step in. ###
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