Tony Hollin, guest columnist
When I think of what makes America great, the first thing that comes to mind is freedom of choice. In this country we are fortunate to worship where we choose, to live and work where we choose and to follow our dreams wherever they lead. Of course, a college education is still the vehicle that drives the American dream, now more than ever.
Under his new budget blueprint, President Barack Obama has pledged his support to enable more Americans to live their dreams through higher education. I don't question his good intentions, but I do take exception to one of his proposals.
Specifically, President Obama seeks to eliminate the 43-year public-private partnership that is the Federal Family Education Loan Program (FFELP) effective in 2010. He plans to nationalize the student loan industry and to eliminate independent student loan providers. This means that students and parents would not have the ability to choose their lender.
Instead, all loans would be provided under the Federal Direct Loan Program and processed by large government contractors. Borrowers would not reap the benefits of market-based competition. The Federal Direct Loan Program, which currently serves 25 percent of this nation's colleges and universities, is ill-equipped to offer the competitive service and support provided by FFELP entities to more than 5,000 institutions for over 40 years.
I work for Edamerica and Edfinancial Services, a national student loan lender and service provider, respectively, headquartered here in Knoxville. Together, we employ more than 400 people whose livelihoods depend on originating and servicing FFELP loans. I am also the father of two young sons, whose generation will inherit an enormous national debt. The president's proposal to issue all new student loans through direct lending will require a half trillion dollars of new Treasury borrowing over the next five years. This is in addition to the recent unprecedented expansion of federal debt.
Sen. Lamar Alexander has called the proposed government takeover of the private-sector student loan program "radical and wrongheaded." I happen to agree with his assessment.
The budget doesn't mention guarantee agencies, but presumably, eliminating FFELP also means eliminating the guarantee agencies that underwrite these loans. Replacing FFELP with 100 percent direct lending would cause widespread layoffs in the student loan industry; 30,000 people could lose their jobs in these already difficult economic times.
Furthermore, more than 75 percent of America's colleges and universities currently utilize the FFELP program to provide funding for their students. The disruption to their processing would be chaotic and the cost exorbitant.
The way to lift our economy out of recession is through job creation, not the creation of more government bureaucracy. But the bottom line is about choice, free enterprise and the American way of life.
Nationalizing the student loan industry would be the equivalent of the government taking over the parcel shipping industry and doing away with FedEx and United Parcel Service, relying entirely on the U.S. Postal Service.
We at Edamerica and our service provider, Edfinancial Services, wholeheartedly support President Obama's commitment to making education a national priority. We're confident that the president, the House and the Senate understand that private entities like Edamerica ensure competition among lenders for the benefit of America's students and families.
For the past 20 years, Edamerica has enabled over a million students to achieve their dreams of a college education through low-cost student loans. Edamerica is an open-access lender, and we're committed to providing low-cost loans to students at public and private four-year and two-year institutions nationwide.
We've worked diligently with more than 3,000 schools across America and right here in Tennessee to ensure that students and families have a choice in the important decision of who provides their education funding. That way, they can benefit from the best customer service at the lowest possible rates. Edamerica remains committed to its mission of creating access to higher education through the Federal Family Education Loan Program.
Return to Edamerica in the News