Many students seem to take their student loans for granted. The prevalence of the student loan… Many students seem to take their student loans for granted. The prevalence of the student loan industry in the United States is almost unmatched in its ubiquity — if you’re attending college or graduate school in the United States, it’s basically assumed that loans help defray at least some of your educational expenses. Whether they’re federally subsidized Stafford loans or private transactions with small banks, student loans are a nearly uniform aspect of the college experience.

So the thought that there is a major storm brewing over the future of government-subsidized lending in the United States might come as a surprise. But under President Barack Obama’s new education agenda, subsidized student loans currently run through private lenders, such as Sallie Mae, JP Morgan Chase and Citibank, would be replaced with an expanded program of direct government lending, cutting out the middleman and offering savings to both students and taxpayers.

Under the current system, the government backs and subsidizes the vast majority of education-related private loans. And, although this subsidy guarantees low interest rates for students, it also pays into the profits of the companies offering the loans, effectively allowing them to loan out huge amounts of money and collect guaranteed interest at almost no risk.

The new system would simply bypass private lenders and give money directly to students and would use the savings from the interest payments — estimated to be as high as $94 billion over 10 years — to make the financing of Pell grants mandatory and to expand the program to more students.

Unsurprisingly, the private lending corporations are up in arms against the proposal, saying that it would put people out of work and sound the death knell for their business model.

But really, why should we as students and taxpayers be forced to pay more for our loans in order to keep an inefficient industry afloat, only to pay the government again for the same reason when tax time rolls around every year?

The fact these jobs are built on an outdated business model that the bankers don’t want to change because it’s profitable is no reason to preserve that model and force people to keep paying for it.

And it’s hard to argue against the merits of expanding the Pell grant program, which is the lifeblood of many a college student’s finances. Expanding these grants would give a larger percentage of the population the option to pursue higher education when previously people were either unable to qualify or couldn’t get a piece of an already too-small pie.

Private lending institutions obviously have a vested interest in keeping their business models alive, even though they are suited to an outdated era of lending in which the government did not have to guarantee the repayment of every penny because of economic collapse and the ever-rising costs of a college education.

We hope that Obama’s plan is allowed to stand and that it can finance the next generation of students effectively and fairly. It might smack of big government or harmful business practice to the small number of companies actually hurt by the policy, but for the huge number of students and general taxpayers who would end up saving money, this idea seems to be nothing other than a good one.

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