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September 21, 2009

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Aaron

Perhaps "no impact" is a slight exaggeration - nothing is free of impact entirely. However, I definitely think that the howls of outrage at a "government takeover of the student loan industry" are disingenuous at best.

Editorials and even reporting pieces in places like the Wall Street Journal have claimed that the federal government will become the "sole source of student loans." This is, frankly, a lie. The federal government will become the sole source of federally-guaranteed loans, while private enterprise will still be able to make non-federally-guaranteed loans.

There's a parallel with people fearing that government will take over medicare: Stafford loans are ALREADY a government program, and eliminating the extra private-sector step in the Stafford process just simply isn't the earth-shattering takeover the banks say it is.

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