A few quotes from his post:
-"The emerging scandal over student loans – and financial aid administrators that have cozy relationships with lenders – is only the tip of a scandalous iceberg."
-"The Federal government subsidizes college loans in two different ways...The first way is for the federal government to lend students the money directly. ... The alternative is for the federal government to subsidize student loans indirectly by guaranteeing banks and other private lenders that if a student doesn’t repay the loan, the government will."
-"this second alternative is a great deal for ... lenders...But it’s a lousy deal for American taxpayers. According to a study by the Center for American Progress, taxpayers pay about $7 more for every $100 lent by the private lenders than they do on direct government loans. That amounts to billions of taxpayer dollars each year ... that could be saved if the direct loan program was the only program."
Reich draws the obvious conclusion that the student loan guarantee program exists because of the lobbying clout that banks have with Congress. Time to start writing your legislators; I know I will.