The College Guide has discussed the continuing fight over Obama’s proposed direct-lending program before. Lenders oppose the plan and have created an alternative proposal to keep the banks in the student lending business. Back in January the Congressional Budget Office estimated that the lenders’ Student Loan Community Proposal would save taxpayers $13 billion less over ten years than the Democrats’ plan to move all loans to direct lending.
Well that looked a little wrong. So everyone went back to work to come up with new calculations more amenable to Democrats, President Obama, the banks, and (presumably by extension) American taxpayers. And so, according to an article in the Chronicle of Higher Education:
The nonpartisan Congressional Budget Office, at the request of Democrats, made another review of the latest alternative the industry proposed to President Obama’s plan to end the bank-based loan program. And the budget office concluded the industry plan would save taxpayers about $8.5-billion less than would the Obama administration’s plan.
Well, $8.5 billion vs. $13 billion. I guess that’s progress.
The new estimate came from reconsidering how long student loan companies remain involved in providing student loans. The savings calculations are based on ten years or mere five years of bank involvement before the industry is finally eliminated from higher education.
Mark Kantrowitz of FinAid says the numbers don’t really matter, however. It’s not really money yet: “These figures are [just] the excuses needed to justify spending more money on student aid without having to raise taxes or cut other programs.”