Government already guarantees student loans made by banks. As in so much else these days, government bears the risk and the private sector reaps the profits. That's why it makes sense for the Department of Education to cut out the middleman and just loan to students directly, at probably far less cost. There could be one clearinghouse for students and their families to go to for loans, instead of a confusing menu of banks. You'd cut out huge, duplicative administrative costs at the private lenders, not to mention big profits, kickbacks to college employees etc.

Is this a recipe for socialism? Only if you think government-supported educational lending is socialism from the getgo, in which even Citigroup-mediated student loans would be something Norman Thomas could cheer. If you're going to have a government program, have a government program and don't twist yourself in pretzels trying to make it look like the private sector. Maybe both Republicans and Democrats can agree there has been too much mingling of the private and public spheres. Reinstating a healthy separation should involve taking some activities away from business as well as removing some functions from government and giving them to private enterprise.