Sunday, April 12, 2009

Student Loans

Useful story in the New York Times on the Obama administration plans to reform the hugely profitable industry of government subsidized private lending for higher education, which would save billions of dollars now going, in part, for huge salaries and benefits for private lenders.

The lobbyists are on this case.

David M. Herszenhorn, "Plan to Change Student Lending Sets Up a Fight," New York Times, 12 April 2009.

My own view is that if the government needs to subsidize these lenders to guarantee their huge profits, then the loans would be better made as direct government loans without the private industry rake-off. As a college professor, I see students leaving college every year with huge debt loads, or taking on too many hours of low wage work while trying to stay afloat in college, thus interfering with their ability to spend time on their educations. Then they leave college with debts that force them to make career plans based not on public service but on paying back their debts.

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