The National Defense Education Act (NDEA) of 1958 was the first federal investment in low-interest student loans and became a precedent for expansion of student loans in the Higher Education Act of 1965. In its controversial loyalty provisions, the NDEA required loan recipients to affirm loyalty to the U.S. government. Between 1958 and 1962, thirty-two colleges and universities refused to participate or withdrew from the NDEA loan program, arguing that the loyalty provisions unfairly targeted students and violated principles of free inquiry. This essay argues that debate over the loyalty provisions fractured a partnership between progressives who favored general aid to education and conservatives who supported short-term investment for defense purposes. Although debates over the NDEA loyalty requirements seem specific to the Cold War, a close examination of the arguments illuminates their alignment with long-standing ideological conflicts over legitimacy of federal aid to higher education.