Last year, Sallie Mae CEO Albert Lord made an informal comment that he wanted to pay the state $20 million per year to take over the student grant program from the Pennsylvania Higher Education Assistance Agency (PHEAA).

Recently, the national loan provider made an unsolicited offer of $1 billion to take over the agency, which PHEAA promptly rejected. Although Gov. Ed Rendell initially rejected the idea, he said he found the proposal intriguing and it merited further study. In a statement following PHEAA's rejection of the offer, Lord said that when fairly evaluated, the transaction would be very beneficial to college students because "students would benefit from even lower college costs."

While Sallie Mae contends that by running the state grant program, it will be more efficient and offer students competitive loan rates, it is difficult to say how they could accomplish this.

With Sallie Mae and PHEAA competing for student business, interest rates for student loans can remain low. Without this competition, there is no way to gauge how high these rates could go when the economic factors force Sallie Mae to raise the interest rates. Thus students may face greater challenges in paying for school and also greater challenges when they graduate and are burdened with loan payments.

Does Rendell expect higher interest rates to truly make college a more affordable option?

Sallie Mae, a for-profit corporation, would be making healthy contributions to its own financial status because of the efforts of students who are simply trying to obtain a first-class education.

The student's hard-earned money after graduation will go to shareholders of the company, while PHEAA, profits the state, not shareholders. Furthermore, the board of PHEAA is composed of state legislators, who are held responsible by the voting public and thus can regulate the actions of PHEAA. In contrast, Sallie Mae is governed by investors who are not bound to the voting public, but to their own pocketbooks.

Penn State students have faced rising tuition costs continually over the past few years, causing many students to take out additional loans or sacrifice study time for part-time jobs, if not continue their education at a less expensive institution.

In an era when education is championed and lawmakers strive to make college affordable, is it not hypocritical to hand over the state affiliated student loan provider to a private corporation?

Neither Gov. Rendell nor the state Legislature should allow such a buy-out to take place. The beneficiaries of such a deal would be state tax coffers and Sallie Mae shareholders. Students will lose.