Students stand to be directly affected by Obama’s $3.5 trillion budget blueprint that was approved by Congress last week.

The budget advocates shifting the government-guaranteed private student loan process to an entirely direct loan program headed by the U.S. Department of Education, substantially cutting private lenders out of the federal student loan business.

According to the budget ,this move will save more than $4 billion a year, money that will be “reinvested” in student aid.

“Right now, the subsidies in the government-guaranteed student loan program are set by the Congress through the political process. That program has not only needlessly cost taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil in the financial markets,” the budget document states.

Currently, there are two lending programs backed by the government, the Federal Family Education Loan Program (FFELP), and the U.S. Department of Education’s Direct Loan Program. The former depends on banks and other lenders to provide loans, while the latter provides money directly from the government.

But Angela Cadell, a spokeswoman for Oklahoma Guaranteed Student Loan Program, which facilitates government student loans in Oklahoma, said no student has been denied an educational loan because of the economic crisis.

“I think it is really important to make it clear that money is available for students to go to school,” she said.

The majority of students who take out federal loans for college are part of the privately-funded FFELP, Cadell said.

She said the move to make all federal student loans direct from the government would decrease competition and quality of service.

“What we think is most important about the FFELP program is in terms of the services to students,” Cadell said. “We believe choice and competition matter.”

The FFELP private-public partnership has been in place for more than 40 years,with 51 banks and private lenders in Oklahoma that provide loans to students, Cadell said.

But Daniel Reck, president of The Economics Society of Oklahoma, said for students it’s not as important where the money is coming from, as long as it’s there.

“As economist it’s always nice to see the private sector being involved, but as a student it doesn’t matter as long as the money is there,” Reck, economics senior, said.

While private lenders and banks would lose business from students, and are largely opposed to the idea, the extra funding provided by redirecting the student loan process could benefit students, Sam Ikard, president of Students for Barack Obama, said.

“I would say it’s definitely a good thing and investing in the future of our country,” Ikard, political science senior, said. “College is becoming more and more expensive and diminishing the burden of a student to pay for college is always a good thing.”

Whether the shift in process is a good thing or not, banks and other lenders aren’t letting go of student lending without a fight.

Cadell said although the Oklahoma Guaranteed Student Loan Program supports Obama’s efforts to make higher education more affordable, it does not support the proposed changes.

The organization is working with grass roots delegates and congressional leaders to keep the private-public partnership of FFELP alive. One group the organization is working with is the National Council on Higher Education Loan Program.

The Council released a statement last week after the budget was approved that opposed Congress’ move to restructure the loan process.

“For 43 years, the Federal Family Education Loan Program has fostered competition between student loan providers to offer benefits for borrowers and quality customer service. The program provides locally based services, jobs in every state in this nation and offers a number of customized services to increase delinquency aversion and reduce default,” the organization response stated.

But, despite the rift between Obama’s plans to reinvent the student lending process and advocates like Cadell who are pushing to keep the private sector involved, Cadell said it is now time to let the dialogue between the two sides begin.

“We see the budgetary process as a unique process for a collaborative effort,” Cadell said. “We welcome the opportunity to have these conversations at the federal level.”