When the government gets into the business of business, the things which happen are generally not in the long-term best interests of the consumers. This principle definitely applies to the government takeover of most of the student loan market in the US:
Here [ED Secretary Duncan] is in a February op-ed in the Washington Post arguing his case that “direct student loans” will save taxpayers billions and make life easier for “educators, engineers and computer scientists—the backbone of the new economy.”
Not everyone is convinced. A few days ago, another Secretary of Education—Lamar Alexander—inveighed in WaPo on what the folks at Department of Education “haven’t told us.” Senator Alexander notes that DOE plans to borrow from the Fed at a 2.8 percent interest rate, lend to students at 6.8, and splurge with the difference with a massive new spending program. He reports that the Congressional Budget Office has lowered the estimated savings from kicking out the private lenders from $87 billion to something like $47 billion. Some 2,000 private lenders will be forced out of this business. Services to students driven by industry competition will be eliminated in favor of typical federal bureaucratic “efficiency.” And those “educators, engineers and computer scientists—the backbone of the new economy”? They will be spending years longer and paying lots more to pay back loans that are actually being used to fund Congressmen’s favorite edu-pork programs.
Did I mention that:
The health care bill that the Democrats hope to pass by “reconciliation” to avoid the normal Senatorial voting procedure is now being amended to include the administration’s Big Grab on federal student loans. If this works, we will have one bill in which the federal government not only takes primary control of American health care but also simultaneously takes practical control of American higher education.