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"With the President's release today of his proposed budget for the 2009 fiscal year, we can celebrate an important win for taxpayers and students. The forecasted taxpayer costs for student borrowing through the Federal Family Education Loan program (FFEL) are now reduced, and have come closer to the more efficient Direct Loan program. This comes after last year's budget reconciliation bill cut $22 billion of subsidy payments to banks and reinvested the savings as aid to low-income students and also deficit reduction.
"Although costs between the two programs are closer than ever, it is important to note that in an apples-to-apples comparison of the two loan programs, Direct Loans cost only one-fourth as much as newly-made FFEL loans.
"I'm really pleased with today's news. Since its inception, I have been an ardent advocate of the Direct Loan program and have worked over the years to reduce the excessive subsidy payments in the guaranteed loan (FFEL) program. I look forward to working with my colleagues on market-based reforms to further improve both programs and to build on today's win for students and taxpayers."
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