There are other worries about the direct lending program. Currently, some 75 percent of all available college financial aid comes from the federal government. If the federal government takes complete control of the loan program, colleges and universities in effect will become dependent on a single lender to support their students. The Department's power to control loan revenue, along with its expanded regulatory authority and enforcement power, will give the government vast influence over post-secondary education. Today's guaranteed loan program is by no means perfect.
Taxpayers still bear all the risk.
But there have been several recent improvements in the program. For example, the loan application process has become simpler in recent years. The default rate also has been cut significantly. There is little support for a government takeover of the guaranteed lending program. Congress would better serve both the students and the universities of America by eliminating the direct lending program and allowing the more economical and guaranteed lending program to provide the money to students.