Should federal student loans to help students or banks?

President Obama has made good on one of the most important policy proposals of his 08 platform, proposing to cut the billions that the federal government spends on subsidies to private, for-profit banks to subsidize student loan lending by expanding direct lending from the federal government to students, and using the money that has gone to subsidize bank profits instead to expand Pell grants and other financial aid.

Naturally, the banks and lenders are opposing this plan.