Student Loans As Part Of The Healthcare Bill ???

On Monday, The Hill reported on the Democrat plan to include an overhaul of federal student lending in the healthcare reform bill. 

The article points out:

“President Barack Obama has made reforming student loan programs a high priority of his first term, and the savings created by lending directly to students could save the government $67 billion over 10 years.

“But the student loan industry estimates that nearly 35,000 jobs would be lost if the federal government lent directly to students and only let private companies service the loans.”

This move would drive out private sources of student loans and make the student loan program strickly a government and government-run program.  Aside from my normal reluctance to see the government take over any part of the private sector, it seems to me that the potential for abuse in a government-controlled student loan industry is astronomical.   Who determines who gets the loans?  Who determines the amount of the loans?  Who determines the payback conditions of the loans?  It seems to me that the government’s track record on lending money is not particularly good–remember the sub-prime mortgage market?  Frankly, I wouldn’t trust a government agency to do anything if I could avoid it.  And please explain to me why we need to include this in the healthcare reform bill!