Funding the ever-more-costly college education

SALLIE MAE supports Senator Kennedy's call for greater access to higher education for our neediest students (Op-ed, Feb. 15). We support increased Pell Grants as well as more flexible repayment and loan forgiveness options.

However, we take issue with his assault on private sector lenders, who have helped send 50 million Americans to college. Thanks to competition, students pay less today for their loans than ever. Lenders' profits on guaranteed loans are razor-thin and declining. At Sallie Mae, we make less than half a penny for every dollar we lend in the program.

Even though profits continue to shrink, the private sector will provide more than $1 billion in fee reductions this academic year. Thanks in part to private lenders, defaults are at record lows .

Claims that the rate cuts proposed by Congress would save students almost $3,500 are overstated. Seventy percent of students would receive no benefits from these cuts. They phase in incrementally over five years, and lapse just six months after they take full effect. Those students who did realize savings would see only a small fraction of the amount claimed.

TIM FITZPATRICK
Chief executive
Sallie Mae
Reston, Va.

I APPLAUD Senator Kennedy ("Grant access to higher education") for his keen vision, identifying the financial burden of student loan debt that hamstrings many of our college graduates. He accurately identifies a vital flaw in the college aid system: High debt discourages involvement in socially vital public service professions.

The first job out of college heavily influences the character and direction of a career. Our society would benefit greatly if more people spent a period early in their careers learning the value of community involvement .

Though public service does not pay a high wage, it should not be a financial hardship. Forgiving student loans after 10 years in public service professions could provide the financial incentive for college graduates to incorporate community involvement into the foundation of their career.

MICHAEL WEST
Somerville

SENATOR KENNEDY should be commended for his efforts to improve college access and affordability, and he rightly identifies the fundamental problem facing families today: soaring tuition that keeps middle-class families outside college's doors. But instead of addressing escalating college costs, he has chosen to vilify the competitive student loan providers that serve the vast majority of America's students and families.

Competitive lenders provide critical resources to students and parents that the government-run program simply can't match: lower rates and fees, superior service, and enhanced financial resources.

More than 80 percent of colleges and universities have rejected the government-run Direct Loan Program because it can't compete with the benefits competitive lenders offer. It also fails with respect to saving taxpayers money. The Department of Education has estimated that the Direct Loan Program has a $16 billion funding shortfall .

College tuition has risen at double the rate of inflation for more than a decade. If Senator Kennedy truly wants to improve access and affordability for middle-class families, he should address the primary financial obstacle to college and let competitive loan providers continue delivering superior service to students and families.

JOANNA ACOCELLA
Executive vice president
College Loan Corp.
San Diego

SENATOR KENNEDY accurately portrays the college affordability crisis. However, his proposed solutions don't entirely fit the bill.

First, only about 11 percent of borrowers have a debt burden higher than 15 percent of their monthly income, according to the National Center for Education Statistics. Most of those are graduate students.

Second, the "artificially high" interest rates he refers to are neither high nor set by the lender. Federal law establishes the rates for federal student loans. A law passed in 2001, which Senator Kennedy endorsed, set the rate at 6.8 percent, which is still a better deal than just about any other type of loan.

Third, the idea of competition in lending is very positive. But forcing institutions to choose either private loans or the federal direct loans is not competition. Instead, borrowers should be able to choose the lender, private or government, they decide is best for them.

Finally, federal student aid programs are not going to make any headway in improving affordability until tuition increases come back down to earth.

SCOTT FLEMING
Washington

The writer is assistant director of the Chartwell Education Group. He formerly worked on education policy for Senator Mike Enzi when the Wyoming Republican chaired the Senate Committee on Health, Education, Labor, and Pensions.