Around President Richard Nixon, Congress offered the applying when you look at the 1972 through a quasi-governmental company – the fresh Education loan Income Association, or Sallie Mae – to improve how much money designed for figuratively speaking.

Sallie Mae are viewed as an enlightened expansion regarding Johnson’s program whilst oriented an industry getting federally backed student loans. Banks loaned so you’re able to people, and you may Sallie Mae purchased the latest money about financial institutions, raising the pond of cash designed for fund.

Prior to, it lacked the authority to question federally protected loans; now it may get it done

Once he was opted during the 1992, Clinton forced using Congress a primary posting of the student loan system you to definitely generated the us government the fresh head financial of your own loans – not only the insurer.

Clinton’s program removed the latest middleman between your regulators-backed loans and you can children. New direct mortgage system worried Sallie Mae additionally the banks: Today they’d to help you take on a national-work on system that may build fund on a lower interest without the need to turn a profit.

When Republicans acquired control over Congress in 1994, they relocated to eliminate the direct mortgage system and you will privatize Sallie Mae. Annually of bitter political infighting ensued until Clinton and congressional Republicans hit a damage, one that basically stored their system. Read More