If your philosophy is that government can do everything better than the private sector, eventually, you’ll luck out and hit one area where that otherwise nutty philosophy happens to be true. President Obama’s plan to end private student lending and channel all loans through the direct federal program is the right way to proceed.
President Obama’s plan has caused quite a stir among private lenders, as you can imagine, and as demonstrated by this Washington Post story, which begins:
With the Obama administration proposing to overhaul the programs a majority of American students use to finance their college education, the student loan industry is fighting back.
The administration is calling for sweeping changes to the decades-old approach of providing federal subsides to private loan companies, arguing that the revamp will save $94 billion that can be redirected to needy borrowers and help even more people go to college. But the industry and its congressional allies are countering that it would add billions to the national debt, put thousands of industry employees out of work and provide shoddy service for borrowers.
The result of the growing confrontation will determine the way students across the country pay for college and, potentially, the fate of dozens of student lending firms.
Sounds like the beginning of intense Lobby Wars to me. Dick Morris agrees:
Republicans and some Democrats — who are beholden to Sallie Mae and other private lenders for their generous campaign contributions — will try to pretend that this issue is one of big government vs. small government. It is not. The issue, in its starkest terms, is high college costs vs. somewhat lower costs. Our kids — and their parents — deserve a break.
We can now just sit back and enjoy the fun with a ringside seat.
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