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Sallie Mae, which as the country's largest student loan provider has a lot to lose from the Obama administration's proposal to eliminate the Family Federal Education Loan Program, is floating an alternative that would save the program but cut its costs significantly. In a letter to sent to its college customers, the lender outlined a plan that would entail permanently extending the emergency programs that Congress put in place in 2007 to ensure the continued availability of student loans given the distress in the financial markets but, like the Obama plan, contract out to companies through auction the right to service all federal student loans. Competing analyses of the Sallie Mae plan by Mark Kantrowitz, publisher of Finaid.com, and the New America Foundation put the savings from the plan at between 80 and 90 percent of that promised by the administration's proposal to move to 100 percent direct lending.
