President Obama's proposal to transfer a key student loan program from financial institutions to the government would hurt credit unions and students.

Those are among the arguments made by CUNA and NAFCU in separate letters to the House Education and Labor Committee, which held a hearing on the subject yesterday. Obama's budget proposal, which Congress is currently debating, would eliminate the Federal Family Education Loan Program in favor of having the government provide loans directly. The administration contends the change would save taxpayers $24.3 billion over five years and $47.5 over 10 years. CUNA estimates that more than 1,000 credit unions provide these loans.

"Credit unions that specialize in student lending provide a high quality service for their student members, and can provide much needed and individualized assistance if difficulties arise with regard to loan repayments," CUNA President/CEO Dan Mica wrote the lawmakers. "The elimination of FFELP likely will lead to the end of credit union student lending."