Loan Groans

From Cato’s Neal McCluskey:

[. . . ] I’m thinking of the just-introduced Student Aid and Fiscal Responsibility Act. It’s been largely ignored so far, save a little chatter about the community college stuff it incorporates. In a simpler time, it would have generated a lot more copy. After all, it will:

  • end federally backed student loans that come through private companies, and instead make Uncle Sam the universal lender;
  • greatly increase Pell Grants and peg their growth to the rate of inflation plus 1 point;
  • balloon the federal Perkins loan program;
  • authorize $5 billion over two years for elementary and secondary school facility projects, with a focus on “green” efforts;
  • authorize $10 billion over ten years for Early Learning Challenge Grants; and
  • furnish $12 billion for community colleges.

Not all of this, I should say, is terrible. Getting rid of the Federal Family Education Loan Program — which backs loans coming from ostensibly private companies and guarantees lenders a profit — is a good thing. But replacing it all with loans directly from D.C.? That’s a bad thing.

Right. College costs are rising (for a variety of reasons). Therefore, let us subsidize them even more via direct monies to the institutions as well as indirect monies via the students. As a result of these things, college costs have no reason to slow their growth (let alone shrink) because the money available to purchase items in the market has also increased. However, someone has to pay for all of this and I’m wondering just who that might be?