There is very little of "the private sector" in the guaranteed loan program, particularly since 2007. The red-meat "jobs argument" is even more evidence that the "bank-based" program is thinly-disguised socialism. Even more telling is that the most vocal contingent of the "bank-based" program is not banks but rather the state government lenders, state government guarantee agencies, and their amen corner in the U.S. Senate. Another CHE article reports an accusation that one part of the federal government is "lobbying" another part of the federal government. There strangely seems to be no criticism about state governments lobbying the U.S. Senate and other parts of the federal government. This isn't an issue of federalism but rather protectionism -- protecting old-time state monopolies and near-monopolies. Nothing inherently wrong with that. What should be pointed out, however, is the high cost to the taxpayers -- no matter what state you live in, you do pay federal taxes. The state entities like to point out that their is no cost to "state taxpayers" -- Uncle Sam is footing the bill. Well who is Uncle Sam, and who is paying for that? And what about the "choice" argument used by some opponents of direct lending? "Choice" doesn't seem to apply when a state lender is trying to protect its slice of guaranteed loan volume. Or when a guarantee agency wants ongoing federal cash payments regardless of performance. One side benefit of having Congress do nothing -- no stopgap liquidity extension, no SAFRA -- is preventing the enactment of the state government set-asides in SAFRA.

Any incentive for "improving student achievement" is an incentive toward academic fraud. US degrees are on the fast track to becoming expensive bird cage liners, just like the degrees of China and other countries incentivized by money.