pros and cons of for profit education

[cookderosa]

I guess I wasn't clear the first time. There is really no difference between FFEL and Direct Student Loans. They are both government-backed loans. They are both loans that are guaranteed by the federal government. I received a federal loan through the bank. There was no credit check because it was guaranteed by the government. Now, that same type of loan comes directly from the government. The only difference here is that direct loans are cheaper for the government to administer. That cost savings is now being used to increase the Pell Grant award.

Private student loans from banks were available before the elimination of FFEL, and they are available now. These are not government-backed loans. Again, there is no difference between now and before, except that you get your government loans directly from the government. The government no longer has to pay subsidies to the banks and other organizations, and the financial aid system is easier for schools to deal with. Also, because all government loans are being offered directly by the government, there is no lender that the government is guaranteeing payment to. FFEL is the system that used external lenders. There is no other lender than the federal government with direct loans.

And, only independent students qualify for that high of a cap. Most teenagers will be dependent students and will only qualify for a max of $31,000 for their undergraduate degree.

To simplify:

FFEL Loans - Government guaranteed loans offered through banks and non-profits. Anyone could get these loans because there were no credit requirements. The caps on borrowing were basically the same. Caps only go up to keep up with inflation. There are lenders the government has to pay.

Direct Student Loans - There are no lenders that the government has to pay because the government is the lender. There are no banks or non-profits to subsidize. Other than the things previously mentioned, direct loans operate the same way as FFEL loans.

Private Loans - These are loans directly from banks that are not subsidized or guaranteed by the government. They require a certain income and credit standing or a cosigner with good credit and enough income. These were available pre-2009, and they are available now.

I get it, you support the change, which is fine. I think it's probably a political difference of opinion, and I don't evangelize, so carry on.