Student Loan Industry Bailout – $112 Billion

March 11, 2010 | Category: Student Loans

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The Department of Education estimates it will buy $112 billion in FFEL loans from private student loan companies. Under the Federal Family Education Loan program (FFEL) the government assumes the risk of default, and pays the financial fees for student loans through private companies.

These private loans are also costing the government more:

The CBO found that compared to the William D. Ford Federal Direct Loan program, an alternative system in which the government just directly provides students with loans, FFEL loans cost the government 10 to 20 percent more (PDF). Eliminating the unjustified subsidies and government financial backing for the FFEL program by expanding the existing direct loan program is projected to save $67 billion over the next decade.

Read the entire story at FireDogLake.com:
$112 Billion Student Loan Industry Bailout a Lesson in Corporate Welfare