Obama: Cut banks out of student loans

WASHINGTON, April 24 (UPI) -- President Barack Obama announced plans to make college more affordable, including cutting the role of banks as middlemen in the U.S. student loan program.

Appearing at the White House, Obama said the Federal Family Education Loan program, which makes federally guaranteed loans through banks, should be dropped and the Direct Loan program expanded.

"And there's only one real difference between Direct Loans and private FFEL loans," the president said. "It's that under the FFEL program, taxpayers are paying banks a premium to act as middlemen -- a premium that costs the American people billions of dollars each year. Well, that's a premium we cannot afford -- not when we could be reinvesting that same money in our students, in our economy, and in our country."

The savings would be used to expanding the Pell Grant program, Obama said. That would include raising the maximum size of Pell grants and increasing them by an annual amount above the inflation rate.