Arne Duncan Pushes to Cut Out the Middleman in Student Loans

Education Secretary Arne Duncan on Tuesday urged the Senate to overhaul student loan policies, arguing that executives at lending companies like Sallie Mae have enriched themselves while American college students shoulder loads of debt, the Washington Post reports.

"Working Americans pay while bankers get rich," Duncan said. "Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses and scientists -- the backbone of the new economy -- face crushing debt because of runaway college tuition."

Duncan's strong words were part of the Obama administration's continuing effort to end a program that makes private lending companies a middleman between the government and college students. In September, House Democrats resisted strong industry and Republican opposition and passed a bill that would mandate a switch to direct government lending. It would put an estimated $80 billion in savings over the next decade toward grants and scholarships for students. The bill has stalled in the Senate as Democrats strategize about how to circumvent a virtually certain Republican filibuster.

Sallie Mae said its workforce would drop from 8,500 to 6,000 if the bill passes, and the lending giant is running ads in Indiana and Pennsylvania to raise awareness about job losses the legislation would cause.