Look....This Guy Gets It.....

...in today's Washington Post, Kevin Bruns has an Op-Ed that very succinctly summarizes why private lending institutions are involved in the government sponsored student lending mission.Kevin points out 3 primary reasons why the private-public relationship exists in government student loan programs. I'll go over them here, but Kevin does it with less words than I can.

1. The "subsidies" are neccessary to entice lenders into the program to offer below market interest rates for otherwise non-creditworthy applicants. See, the government needs to foster the market in order to attract the capital that funds $83 billion of student loans each year.

2. Technology, finance, and service innovations provide an environment that improves the product design beyond the original government designation, ultimately benefitting the student borrower. The Deptarment of Education isn't a consumer finance organization; we find it inconceivable that a government agency can be sufficiently motivated to perform the function that the private lenders currently serve.

3. Increased competition ensures that the student borrowers are getting better deals than the government loans specifications due to #2. Here at CollegeLoanSearch, we're firm believers in free market enterprise as a solution to most social demands; and we hope lawmakers also have such beliefs.

See, we took Kevin's sucinct outline, and with twice as many words we managed to recap his op-ed. You're better off reviewing the original piece though.