Touting a victory over "an army of lobbyists," President Obama today signed legislation that would take some of the student loan business away from credit unions and banks.
Obama signed the bill that included fixes to the original health care legislation and also eliminated the program which provides fees to credit unions and banks to act as an intermediary in providing loans to college students. The government will now be a direct lender.
"For almost two decades, we've been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks," Obama said during a signing ceremony at Northern Virginia Community College in Alexandria.
Approximately 1,000 credit unions offer these loans, but the Obama administration contends that replacing them with direct lending will save $87 billion over 10 years.
Many of those credit unions offer private loan programs and originate those loans.
According to the most recent Callahan analysis, the total amount of credit union funded private student loans is between $190 million and $220 million.