Friday, April 24, 2009
Ben Nelson and Higher Education Loans
Democratic Senator Ben Nelson (Nebraska) is apparently holding up progress on direct federal lending to students in higher education, which would save them and the government money. According to a story in the Huffington Post, Nelson is threatening the Obama administration reform because federal subsidies send money to private student lenders in Nebraska.
The Bush administration changed federal student lending for higher education to force it into privatization -- but then guaranteed all the loans, which in effect is simply a direct subsidy of the banks, not the students who are borrowing the money, and who actually pay higher interest to the banks than they would pay if they were able to borrow the money directly from the government.
If students are to be forced to borrow money as the only way to attend even public universities, surely the government, if it is the ultimate source of the money, should lend the money directly at the lowest possible interest. But the lending regime in any form is itself part of an abandonment of the national obligation to support public higher education.
See Ryan Grim, "Obama to Nelson: 'We're Going Around You,'" Huffington Post, 24 April 2009.
Nelson photo from the Senator's official web site.