Saturday, December 05, 2009

Compulsory Public "Option" In Student Loans

From the Wall Street Journal:

There's encouraging news on that other Washington effort to force Americans into a government-run system. The White House plan to drive private lenders out of the market for student loans is igniting a backlash on campus and Capitol Hill.

The typical tale of a free-speech controversy on campus involves administrators landing on some poor undergrad who violates political correctness. But in this story the administrators have been afraid to speak as the Department of Education pressured them to drop private lenders and embrace the department's own Direct Lending (DL) program. The pending bill, which has passed the House but is stalled in the Senate, would ban private lenders from making federally guaranteed loans after July 1, 2010.

Congress has already enacted regulations in recent years to discourage making loans without a federal guarantee. And many lenders have quit the business. Now the White House and Democrats like California Rep. George Miller want to go further and convert students from private loans largely backed by the taxpayer into government loans made and serviced by government and backed by the taxpayer. Think of this as a prelude to how Congress will rig the rules for any public option in health care.

The private lenders have been the most popular choice, while—big surprise—the government's program has a history of shoddy customer service...

Schools got the message. The leader of a large university recently refused to discuss the issue with us on the record, fearful that the feds are taking names.

You'll want to read the whole thing.

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