Congressman Steve Scalise today issued the following statement regarding President Obama's press conference after signing the health care reconciliation bill, which included the government takeover of the student loan industry.
While President Obama claims the takeover of the student loan industry will save $68 billion, he fails to mention that the "savings" have already been raided to offset the $2 trillion government takeover of health care, and will put 35,000 Americans in the student loan industry out of work. The $68 billion number he refers to as "savings" also fails to mention that $48 billion of that amount goes to market risk, not administrative costs.
"Today President Obama ushered in a new era of big government when he signed into law a government takeover of student loans. This latest power grab will put 35,000 Americans out of work while raiding the student loan fund, and $20 billion of that money will be used to pay for the government takeover of health care," Scalise said. "By eliminating the Federal Family Education Loan program which uses private banks, they will be killing private sector jobs and replacing them with thousands of new federal bureaucrats. Rather than more government takeovers and bailouts, we need to reduce the size of government and living within our means."
There are currently two types of federal student loan programs, the Federal Family Education Loan (FFEL) program, which is a private-public partnership and the Direct Loan (DL) program, which is government-run. Currently there are approximately 4,400 higher education institutions participating in FFEL and 1,700 schools in DL. This bill eliminates the FFEL and forces every school who participated in this program to switch to the DL program by June 30, 2010, subjecting students, parents and schools to a one-size-fits-all government option, eliminating competition and consumer choice.
According to the Financial Services Roundtable, this takeover will result in 35,000 jobs lost in the private sector.