FFELP runs like a top!

This isn't' the first time we've seen this story before. It crops up several times a year. It's a scam to defraud FFELP out of proceeds. But you have to ask yourself: Does this happen very often with other types of unsecured lending (i.e. credit cards, personal loans, etc)?

Our bet is that yep, it does happen...but not to the tune of $2.2 million per instance. See, a private lender loves their money. It's how they make money. So if a private lender flushes money down the toilet, they cannot allocate that money to make more money. The government, on the other hand, merely asks the Dept of Treasury for more money when they screw up. There's no accountability or consequences for this sort of thing.

Yet another reason why FFELP needs to be privatized with the help of a well placed US government guarantee.