Ending the bank-based federal student loan system in 2010 was all about cost savings. Taking subsidies banks received to make loans and putting them toward increasing the maximum Pell Grant award was a sensible policy. And students would be unaffected because they could always borrow straight from the U.S. Department of Education.
But the White House announcement today of a "student aid bill of rights" shows that having the government make all federal student loans directly has substantial benefits beyond just cost savings. Ending the fight about how to make loans has made it possible for the Department to exercise greater control over critical issues of debt collection, servicing, and repayment that it could never really influence when banks issued loans.
Read more at the New America's Ed Central: http://www.edcentral.org/studentrights/