Monday, March 22, 2010

student loan changes pass House

Overshadowed by the health care bill is the passing of another tremendously important piece of legislation: the student loan bill. It eliminates the federal subsidies to private lenders and clears the government to lend directly to students. It's important in the sense of both cutting useless paper-pushers out of the system and adding needless subsidies of corporate profits for notoriously corrupt institutions while breaking up the parasitic relationship between lenders and colleges. Meanwhile, it also raises the Pell Grant allowance while saving $61 billion over 10 years according to the CBO.

It's an interesting and illustrative argument between Democrats and Republicans in that Republicans are trying to protect the right of private entities to collect taxpayer money without serving any real purpose. The government sets the standards for the loans, pays the fees while the student is in school, and guarantees the loans against default. The government also lends directly to students with a number of other loans, so they already have the infrastructure for lending. All the private lender does is collect free money.

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