Enter Senator Sherrod Brown of Ohio. The Democrat proposed the Student Loan Debt Swap Act, which would allow students caught in the old lending scheme to move their debt into a direct deal with the federal government, which would in turn pay off the private obligations ahead of schedule. When officials at the Congressional Budget Office scored the 2009 version of the bill, they found it would save the government more than $9 billion in lender subsidies and payments.
Yet Senator Brown’s bill failed in the Committee on Health, Education, Labor, and Pensions and has languished there ever since.
For banks, the FFELP was the best of both worlds while it lasted: private loans, government guarantees. And they made the most of it, relying on the government to backstop a huge amount of risk. In 2008 testimony before the Senate Banking Committee, Tom Deutsch, then deputy executive director of the American Securitization Forum (ASF), a trade and lobbying association for the securitization industry, claimed that a startling 85 percent of loans issued under the program were financed on the global market.
Once again, the banks find a way to get the Government to take the risk (and the potential losses), while pocketing the profits, all on the backs of America's youth.
There's no welfare like corporate welfare.