Cutting out the middleman…
As a cost cutting measure many places are cutting out the middleman. The latest middlemen to be cut out are the banks. Instead of offering loans to students and receiving a fee from the government for the student loans they service, the students will get their loans from Uncle Sam himself. The rationale is that this way the government can use that savings from the fees to increase the amount given out in the form of Pell grants.
Banks could stand to lose billions of dollars.
Opponents say that this will create a monopoly and will not offer consumers a choice when seeking loans. Though it will save money for individual who could have a reduced interest rate and more grant money available.
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