Last week, botht eh Senate and the House passed teh “Ensuring Continued Access to Student Loans Act of 2008” and it’s heading to President Bush’s desk next.  Bush has already indicated he will sign it.

I need to tell you that I have problems with this legislation.  Like most knee-jerk legislation, it’s a band-aid.

In simple terms, this bill will permit the federal government to purchase loans from lenders, essentially creating what’s called a “secondary market” – a market where lenders can bundle and sell loans to other companies , a common practice.

BUT – in this case it’s a false secondary market as it’s the taxpayers who will be fitting the bill.

My message to Congress – your legislation last year helped create this situation.  While the federal government seems to think it’s OK to operated at a net loss, private industry MUST make a profit in order to function.  It’s just basic economics.