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EDUCATION LEADER CLELAND CALLS FOR RE-EXAMINATION OF 'DIRECT LENDING' CONCEPT FOR STUDENT LOANS IN LIGHT OF NEW CRS REPORT

 WASHINGTON, Feb. 24 /PRNewswire/ -- Student Loan Funding Corporation Chairman Sherrill Cleland said that a new Congressional Research Service (CRS) study, which refutes savings alleged by the General Accounting Office (GAO) if the government would implement a program of government direct lending for student loans, "clearly signals the need for re-examination and wider exploration and debate of the supposed benefits of this idea."
 In stark contrast to earlier GAO claims, the CRS study suggests that abandonment of the current public-private system of lending in favor of direct lending could actually increase budget outlays and reduce national income if the program is unable to duplicate administrative cost efficiencies achieved by private lenders. In challenging earlier GAO assertions that direct lending would lead to federal budget savings, the report noted the government cannot manage the system as efficiently as private lenders and said a direct lending program would add to the federal debt.
 "The current loan program has helped finance the education of more than 50 million Americans since 1966 and should not be abandoned for an untested theory," Cleland said. "America's economic competitiveness depends on a highly-educated workforce. The CRS study tells us it's smarter to test experimental ideas before diving into them headlong.
 "Those of us in the student lending community are continuously seeking ways to improve the current program. We believe Congress enacted dramatic improvements last year when it eliminated regulations that barred millions of middle class students from qualifying for government-backed loans. We should let that program work before reversing course on an untested one," Cleland added.
 "As the CRS study suggests, the federal government does not have the expertise or administrative structure to provide the level of service now offered by the private sector. Moreover, adoption of a direct lending program would unduly burden colleges and universities by forcing educators to become bankers."
 Cleland, chairman of the Cincinnati-based Student Loan Funding Corporation, was president of Marietta College in Marietta, Ohio, from 1973-1989, and was a board member of the Federal Reserve Bank of Cleveland's Cincinnati branch from 1982-1987.
 -0- 2/24/93
 /CONTACT: Sherrill Cleland of the Student Loan Funding Corporation, 202-289-3910/


CO: Student Loan Funding Corporation ST: District of Columbia IN: SU:

DC -- DC020 -- 0076 02/24/93 16:29 EST
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Publication:PR Newswire
Date:Feb 24, 1993
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