Your own words sum up the situation quite nicely:
Sure. My interest rate is variable, set annually, and my loan was made prior to the government takeover of student loan lending, I imagine it enjoys a federal guarantee as a result.
Of course it does. So are your loan options better or worse since the government takeover of all student loan lending? Granted, that some private lenders are still allowed to act as agents of the government in originating and even servicing the loans. That would not, of course, include private lenders for places like Hillsdale College which eschews all government loans.
Is there anything to BO's repeated claims that the situation has substantially improved for borrowers since he cut the greedy middlemen (bankers) out of the loan picture?
No, I don't think I'm splitting hairs. You said Sallie Mae was a government-owned entity, a monopoly. It's never been a government-owned entity and hasn't even been a GSE for nearly a decade.
It isn't a monopoly, it has many competitors. My own local bank originates student loans.
You said that student loans aren't unsecured. Although they're more difficult to discharge in bankruptcy, they ARE unsecured, as “unsecured” means, more fully, “unsecured by any tangible collateral.” And thus, one would expect higher interest rates than a mortgage on real property. ESPECIALLY for loans that are neither guaranteed or subsidized.
I haven't argued that the government takeover of loans was a good idea. In fact, I think it was an atrocious idea. In fact, my own loan details point out how BAD direct government control is. When Sallie Mae was able to offer subsidized and guaranteed loans, I was able, with superior creditworthiness, to pick up a variable rate loan that currently is costing less than 1% per year in interest. And that's an UNSUBSIDIZED rate. Sallie Mae, that evil "middleman" company, had to compete against all the other lenders offering similar loans, all of which could offer guaranteed loans, and were all able to leverage those guarantees to obtain money at lower interest rates. Because all these folks were in COMPETITION with each other, they had to pass along most of those interest savings to the consumers in the form of lower interest rates.
Whether one agrees with the idea of guaranteed student loans or not, the system, as it was before the Kenyan's takeover, worked as envisioned - providing below-market interest rates to student borrowers.
Now that the government has taken over the whole government-guaranteed and subsidized loan program, we see that the government uses ITS TRUE MONOPOLY power to charge much higher interest than I received from the evil middleman company, Sallie Mae.
OF COURSE THE GOVERNMENT TAKEOVER HAS MADE THINGS WORSE! I haven't argued otherwise anywhere at any time.
But the argument must still be made accurately and cleanly. Sallie Mae is not a part of the government, and is not the current provider of federally-guaranteed and subsidized student loans.
Sallie Mae, like all its competitors, offers unsubsidized, unguaranteed private student loans.
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