Tuesday July 26, 2005

KISS THAT SHEEPSKIN GOODBYE. College costs have skyrocketed in recent years. The Republican solution: remove students' protection from interest fluctuations on student loans.

Under the government's consolidation program, former students can lock in a low fixed rate while the interest rate the government guarantees to banks remains tied to the 91-day T Bill... Now, as interest rates are rising again, Uncle Sam is on the hook for an estimated $14 billion, not including loans consolidated in the past year.

To make sure this never happens again, [House Education Committee Chairman John] Boehner & Co. would require students either to continue paying a variable rate after they consolidate their loans or pay a premium for locking in a fixed rate, as happens in the private sector...

The advertised merit of this plan is that it will save the Government money by reducing the amount it invests in the higher education of its young citizens, and prevent Congress from "isolating academia from normal consumer pressure by shielding most students (and their parents) from the true cost of higher education."

That's a lovely spin. Once the magic of the marketplace is allowed to work, we may assume, college costs will plummet, and more families will be able to afford to pay them. It worked great in the 19th Century!

Should this desired and ludicrous effect not take place, even those willing to put themselves deep in hock will not get to college. "Private lenders," the author tells us, "would have that much more incentive to do their jobs properly, making sure taxpayer-backed loans go to students who are good risks." They surely won't take a chance on slackers like Jenny Read:

Jenny Read works 32 hours a week while attending the University of Wisconsin-Superior full time.

Still, the social work major has had to take out student loans each of the four years she's attended college.

"It's rather scary. I already feel like I'm in debt to my eyeballs," she said. "It's scary to know that you only have a six-month grace period before you have to start paying these back. If you don't find a job, you still have to pay these loans back"...

For Read, there's no alternative to student loans, without which she wouldn't be able to afford college.

"There's no way my parents can help me," she said.

You got in just under the wire, Jenny. I hope you don't have a little sister with similar ambitions.

The increased access to higher education that began with the old GI Bill has been nose-diving for some time, and this ought to work like a karate chop to the back of the neck.

I suppose the upside is that they won't be exposed to any liberal professors.
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