Death of a Cash Cow, Part II

WASHINGTON — President Obama’s budget proposal on education would for the first time index student-aid Pell Grant to inflation, guaranteeing low-income college students a stable grant amount, and pay for that expensive shift by eliminating $4 billion in annual subsidies to private banks who make student loans.

“The president has proposed the biggest change in the federal programs that help students finance a college education since the main higher education law was written in 1965,” said Terry Hartle, a vice president at the American Council on Education, which represents hundreds of colleges and universities.

Student Loans, SAM DILLON, February 26, 2009

The Reagan Era made stupid ideas seem ordinary and t encouraged us to not think too carefully. There are so many dumb ideas circulating that it’s impossible to know where to start the critique. Why, for example, were loans the primary form of student aide? And why were private banks involved?

A loan doesn’t make an education affordable, it puts off the costs of the education until after graduation. It’s a classic conservative short-term thinking confidence game. Don’t worry about the loans, the argument goes, you’ll be making more than enough money (thanks to your degree) to afford it.

Meanwhile, conservatives argue for increases in tuition and make enormous profits on textbooks while trying everything possible to drive down wages and salaries. And if that were not enough, they make the loans impossibly expensive (and profitable) by adding the costs of profit and administration.

It would make much more sense to cut if not eliminate tuition and fees. Schools, including universities, should be a ubiquitous and expected as fire departments and highways. In any case, taking private banks out of the equation can help free up a lot of money and potentially reduce the abusive of students via these loans.