As a new Congressional Budget Office report suggests the newly enacted federal takeover of student loans will cost $52 billion, Rep. Howard "Buck" McKeon said the overhaul is a bad deal for both students and taxpayers.
"It is just plain common sense that putting 100 percent of borrowing risk and responsibility on the U.S. Treasury — in other words, on taxpayers — would be a costly proposition," McKeon said in a statement. "Yet because of congressional accounting rules, Democrats were able to claim ‘savings’ by driving out the private sector and transforming the U.S. Department of Education into one of the nation’s largest banks. This new analysis has a simple message: Taxpayers beware."
The student loan overhaul calls for eliminating the federal government’s loan guarantees — which subsidize private banks and other financial institutions for making loans — and replacing them with direct loans made by the Department of Education.
The Obama administrations student loan overhaul could add $52 billion to the federal deficit between 2010 and 2020, according to the non-partisan Congressional Budget Office.