July 8, 2008 · For decades, the federal student loan program has helped tens of millions of students pay for college. Since its creation in 1965, some experts in the banking industry have called the federal student loan program the most successful public-private partnership ever created. It paid for all this by cutting the interest that banks and private lenders earn on every student loan they make. Wadsworth says it also doubled the fees that lenders pay the federal government for every loan they issue. With little or no debate, lawmakers passed emergency legislation increasing the amount of money students could borrow but also authorizing the Education Department to buy up government-subsidized loans from lenders. The idea, Warder says, was that lenders would not get stuck with loans they couldn’t sell or raise money for. read more