Government To Stop Subsidizing Private Sector Education Loans

Odd, or not so odd. In overhauling the student loan lending apparatus, money gets saved by the government by doing direct loans. Which again proves the point that there is no factual basis by which to conclude that government run initiatives are automatically more costly, or less efficient, than the private sector. Private companies overcharge, go bankrupt, fail, waste money, and ultimately, if unprofitable, disappear from the statistical "failure" record. So we are left with hearing some conservatives constantly comparing the entire government record against only the private sector successes. Nonsense.

Here, some student loan changes:

The student aid initiative, overshadowed by the health-care debate, would overhaul the student loan industry, eliminating a $60 billion program that supports private student loans with federal subsidies and replacing it with direct government lending to students.

By ending the subsidies and effectively eliminating the middleman, the bill would generate $61 billion in savings over 10 years, according to the nonpartisan Congressional Budget Office.

(Washington Post)

Republicans are seeing this as a government takeover of education lending, although one should really question the abilities of the private sector if they are subsidized and given risk free business at greater overall cost. And one could hardly imagine that the private sector is in any condition to take on more loans given the shakiness in the securitization industry. Their slice of education loan pie will be entirely sufficient.