SOURCE: ALL Student Loan

ALL Student Loan

February 26, 2009 21:00 ET

ALL Student Loan's CEO Says "Math Error" in U.S. Department of Education Student Loan Proposal Requires Trillion-Dollar Increase in National Debt

LOS ANGELES, CA--(Marketwire - February 26, 2009) - Quentin Wilson, President and CEO of ALL Student, issued the following statement regarding the U.S. Department of Education budget proposal:

"I strongly support President Obama's goal of increasing the completion rate of education beyond high school in the United States. Unfortunately, in conflict with budget language promising 'rigorous evaluation' to 'learn from what works,' the President's FY2010 budget proposal recommends an ineffective and costly nationalization of student lending under the authority of the U.S. Department of Education.

"Ironically, the weakest part of this Education Department plan involves a serious 'math error':

--  The proposal fails to account for the cost of expanding government
    borrowing by nearly one trillion dollars over the next ten years to finance
    the plan.  The plan suggests this borrowing -- up to $100 billion per year
    -- will cost the government nothing, as if the overseas governments and
    investors lending the money will not expect interest to be paid.
    

"Beyond this error, the Administration's 'bold idea' is merely the 'redecorating' of the 15-year-old Federal Direct Loan Program that, until the failure of national financial markets, had been unable to gain market share in competition with the Federal Family Education Loan Program (FFELP). The FFELP is a public-private partnership that has successfully served schools, borrowers and families for 40 years.

"Despite this record of achievement, the credit crisis has revealed flaws in the FFELP financing model. Rather than seeking to preserve the status quo, student lending can and must be drastically restructured. Alternatives already being circulated can achieve the cost savings desired by the Administration while generating private support to avoid burdening future generations with hundreds of billions in national debt, as the nationalization proposal would require.

"I and other leaders of non-profit student lenders share the goal of helping America resume its role as the world leader in higher education. We welcome the chance to work directly with the new Administration on crafting a responsible policy to achieve that goal. We believe a new, 'third way' federal student loan program with stable funding, shared risk, and real benefits for students, schools, and taxpayers can be established at a much lower cost to taxpayers, and without an additional trillion dollars in national debt.

"Such a plan is more consistent with President Obama's stated goals of responsibility and 'pay-as-you-go' than the ill-considered proposal that found its way into the U.S. Department of Education budget."

About ALL Student Loan

ALL Student Loan (www.allstudentloan.org), California's largest nonprofit student lender, is dedicated to providing resources and programs for students and families so they can succeed in education beyond high school. Since 1980, ALL Student Loan has made more than $4 billion in affordable financing available to over 400,000 borrowers.

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