re: #383 LudwigVanQuixote

IN other news I also heard a repot about a bill that would abolish the current student loan system and have students borrow directly from the Fed. Since Federal subsidized loans would not have to pay the interest on defaulted loans to private lenders (the current system) this would save between 40 and 80 billion a year according to the news report I heard this morning.

That money would then be pumped into providing more education money and more pell grants and stafford loans etc…

This is a win win win. It save tax payer dollars and increases education benefits to millions of students.

Of course, the GOP, is calling it an “insidious takeover of education.” The banks, who we just gave 400 billion to, are crying bloody murder.

But remember the GOP is for sound fiscal policy and education!

You’ve obviously never attempted to fill out the FAFSA form.

Also: the system you’re describing has been in place for many years now; it was implemented as the “public option” for the student loan program, with the same promises of increasing competition and lowering costs for all. Apparently, the end result is complete government takeover of the entire system - and object lesson for those involved with the ongoing health care debate. And there don’t seem to be any studies backing up the claim of reduced costs; the claims for this spring from the absence of administrative overhead - because that part of loan servicing is farmed out to commercial subcontractors. The cost is still there, of course, from the customer’s standpoint, but the government is claiming it has vanished when in fact it has simply been transferred to another set of books. The bureuacratic overhead of originating and disseminating the loans, in fact, almost certainly went up thanks to government-imposed inefficiencies when compared with private sector costs, but ignoring the administrative costs provides an illusion of savings.

At least, that’s what a report on NPR had to say about this last week. Not sure how reliable they are, though.