The scholars at the NAF foolishly think they are triumphant! Unfortunately for them, they're too blinded by their own arrogance to realize their policies have reached the high-water mark. Rome is burning NAF, and meanwhile birds of a feather in Congress and the White House are pursuing legislation that would make the central planners in Europe blush! Legislation that will have no positive implications for the economy in 2010! (In fact, those in the know understand it's liable to have negative implications for the economy in 2010 and beyond!) It's the economy stupid! I'll leave you with an admonition from Frederick the Great to his generals: "Those generals who have had but little experience attempt to protect every point, while those who are better acquainted with their profession, having only the capital object (read economy here NAF) in view, guard against a decisive blow, and aquiesce in smaller misfortunes to avoid greater." That about sums it up there Nero--I mean--NAF!

By definition, with only 40 votes in the Senate, if there is a filibuster over healthcare in the Senate, it will be a bi-partisan one.

From what I see out in the financial aid community, most aid directors are moving their institutions into DL for 2010-11. For most institutionsl with vendor delivered information systems, they'll have a DL module so the change won't be too difficult. For small proprietaries and some institutions with in-house information systems, the change may be difficult.

I agree though that FFEL is basically dead.

Although it has a lot of competition, this blog entry is one of Blogger Burd's worst. Maintaining his role as a propagandist for the administration, he warns schools that if the administration's fails to achieve a transition to 100% Direct Loans by July 1, 2010, it will blame schools.

How shameful that NAF and the Obama administration are taking this position. First, we suspect that had McCain won the Presidency and the Department of Education was strong-arming schools to join FFEL, NAF would be sounding the alarm of implementing legislation before enactment. In so doing, they would be right.

Second, lets not forget that there the "transition risk" at the center of the student loan debate (at least for this month) is the handiwork of the administration itself. Simply put, if the administration were to end its irresponsible opposition to an extension of the once-bipartisan ECASLA legislation, the student aid community could start talking about something else--something like how to make loans more affordable for borrowers.

Why is the administration preparing to play the blame game rather than admit that it needs to extend ECASLA? One might cite the aforementioned plan to blame schools (and, of course, suggest that the schools that refused to implement Direct Loans before enactment of SAFRA were duped by FFEL lenders). An alternative explanation is that the administration has concluded that unless FFEL is killed once and for all now, schools will return to it at the first opportunity.

One additional comment: The Department's own data suggests that 42% of loans are already being made in the Direct Loan program. It knows that calculating budget savings on the assumption that only 30% are is not honest. If an honest budget analysis of SAFRA were done, the "scored" budget savings would be well less than the $87 billion regularly cited by the administration, its supporters on Capitol Hill, and, of course, its cheering sections.

Yet, given that the national debt is now over $12 trillion and rising rapidly, shouldn't President Obama care about the reality of deficit spending and himself step forward and put an end to a massive act of what I call "budget fraud"?

The administration seems so committed to its goal of producing illusory savings to immediate spend (on some admittedly worthwhile activities) and killing FFEL for good that it is ignoring the common sense pleas of working aid administrators and is preparing to blame them for a massive mess of its own making.

If the Senate doesn't take up the student loan legislation until next year, as the NAF article suggests, then the timeline to implement reconciliation, have both chambers vote and send a bill to the President means nothing gets enacted until March or possibly even April. Even if only a thousand schools haven't shifted by that point, that's a rather aggressive time frame to ensure a 100 percent transition by July. Surely there is a more-than-trivial number of schools that would prefer not to shift to DL unless they absolutely have to, and would rightfully exercise their option to hold off on enduring a not-costless transition until it's clear that it's necessary.

It seems prudent, if not obvious, for CBO to re-score SAFRA so that it reflects the economic reality of a 2010-11 academic year not fully funded through Direct Loans and with an ECASLA extension, or other temporary stop gap measure. It's difficult to believe that Congress and Education would be unwilling to offer a non-DL alternative and simply throw 200 or 500 institutions (and hundreds of thousands of students) under the bus for choosing to not enact structural changes on a bill that, as of today, has only passed the House. I don't see the nation's healthcare system "prepping" for what's to come and their legislation is technically sitting at the same point in the process.

Clearly, both Congress and Education are aware that a CBO re-score today cripples SAFRA by making the community proposal more financially attractive than SAFRA, on balance, because the assumptions on which the bill was based are just not logistically realistic.

My point? I guess I'm not necessarily convinced that FFELP is dead or should be prematurely regarded as dead.

Relevant Critic makes it sound as if making budget savings is bad. If more institutions are making the switch earlier and saving taxpayers even more than originally anticipated, how is this bad?

Nor are the savings one-time; they will continue year after year.

About the deficit: Wisely, the federal government does not use cash accounting, because cash accounting often results in misrepresentations of the sort Mr. Critic makes. Net-present-value accounting provides a more honest presentation, if honesty is what Mr. Critic is after.

I've had the impression that a PR flack is trolling a few sites I visit regularly, but I've never seen anything like your troll here. The double talk is almost undecipherable. It seems designed to confuse.

FFEL is pretty simple: The government advances the loan, the bank handles the paperwork and keeps the income stream from the indebted student. The bank has nearly unfettered freedom to set fees and interest. The student can't discharge the loan in bankruptcy. The government is out money for the original loan, and out more money if the student defaults.

It's a transfer of public funds to private actors, while the government assumes all the risk. It's, well, it's ridiculous. And almost everyone knows it.

How on earth is not handing public assets to a private company a bad thing? How is it some disaster for the deficit if the government keeps the interest on the income stream for its own advanced principal? How long can lenders keep up this shell game?

Seriously, how long? I'm taking bets.

The central problem is that a college degree in virtually every field does not lead to employment that generates enough disposable income to repay loans needed to obtain that degree, if the student has no family resources to offset the cost of the education. This began to be the case with general liberal arts degrees in the 1980's and has racheted up into a great many professions. This trend has persisted through upturns and downturns in the overall economy and under both Democratic and Republican administrations. It has been exacerbated by the growing trend to require advanced degrees in professions that formerly did not require them, without firm evidence that additional education translates into greater workplace effectiveness (eg in k-12 teaching). Neither switching to direct loans nor the most optimistic projections for economic recovery begins to address the fundamental unaffordability of higher education. Either the system needs to dramatically increase direct subsidies for median and below-median income families (not poor!) or it needs to revert to a workplace climate where living wage jobs that do not require postsecondary education are available. Anything else is a shell game with a short fuse (excuse the mixed metaphor).