Private banks and lenders have for years waged a successful campaign to limit a federal program that was intended to make borrowing less costly.
April 15, 2007
In a fierce contest to control the student loan market, the nation’s banks and lenders have for years waged a successful campaign to limit a federal program that was intended to make borrowing less costly by having the government provide loans directly to students.
The companies have offered money to universities to pull out of the federal direct loan program, which was championed by the Clinton administration. They went to court to keep the government program from becoming more competitive. And they benefited from oversight so lax that the Education Department’s assistant inspector general in 2003 called for tougher regulation of lender dealings with universities.
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