It was only weeks ago when we expected a great debate on the merits of the Administrations sweeping changes to the country’s student loan program. The debate has yet to occur. However, yesterday, nearly 30 student loan companies offered an alternative to the Administration’s Plan. The consortium of lenders (including Sallie Mae), nonprofit state agencies, state-based guarantee agencies, propose to preserve a significant role for private and nonprofit lenders and guarantors in the federal system. The entire proposal can be found at www.studentloanfacts.org.

 

Some highlights of the plan are the elimination of government subsidies, a fee for service platform to address origination, servicing, and collection of loans.   A unique twist to the proposal is the introduction of “risk-sharing” incentives on loan servicing. This added feature from other proposal in the past would, the group contends, retain a competitive market thereby improving the delivery of student loans and would preserve some or all of the 35,000 jobs that are supported by the current system.