Tag: federal family education

Arne Duncan Embraces False Friedman

In a shocking development, U.S. Secretary of Arne Duncan embraced the ideas of Milton Friedman today, championing the funding of students instead of schools! Unfortunately, it was in the context of higher education – Duncan and his boss have done all they can to destroy school choice elsewhere – and he completely misrepresented what Friedman said about higher ed, suggesting that the Nobel Laureate somehow endorsed the federal Direct Loan Program:

We will end the loans under the Federal Family Education Program and make them directly to students – just as economist Milton Friedman proposed 50 years ago, and just as the Department of Education has been doing since 1993 through the Direct Loan Program.

Were Milton Friedman still with us, I think he would be pretty miffed with Duncan. For one thing, 50 years ago there was no Federal Family Education Loan Program. Moreover, assuming Duncan is referring to Friedman’s “The Role of Government in Education,” Friedman was clearly stating that if there is going to be any higher education aid it should go to students, not schools. And then there’s this:

The resulting system would follow in its broad outlines the arrangements adopted in the United States after World War II for financing the education of veterans, except that the funds would presumably come from the States rather than the Federal government [italics added].

It’s bad enough that Duncan and his boss reject Friedman’s very wise and proven counsel when it comes to elementary and secondary education. It’s even worse that Duncan then has the gall to blatantly lie about what Friedman wrote in an effort to sell a rotten and costly piece of federal legislation, the laughably titled Student Aid and Fiscal Repsonsibility Act.

How’d That Get in Here?

Understandably, the public is a little preoccupied right now with efforts in Washington to “reform” health care by making it much, much worse. Fortunately, people are starting to notice that a congressional bum rush is heading right toward them — maybe they’ll be able stop it in time. Unfortunately, that is giving Washington a chance to sneak some other stuff by us.

In particular, I’m thinking of the just-introduced Student Aid and Fiscal Responsibility Act. It’s been largely ignored so far, save a little chatter about the community college stuff it incorporates. In a simpler time, it would have generated a lot more copy. After all, it will:

  • end federally backed student loans that come through private companies, and instead make Uncle Sam the universal lender;
  • greatly increase Pell Grants and peg their growth to the rate of inflation plus 1 point;
  • balloon the federal Perkins loan program;
  • authorize $5 billion over two years for elementary and secondary school facility projects, with a focus on “green” efforts;
  • authorize $10 billion over ten years for Early Learning Challenge Grants; and
  • furnish $12 billion for community colleges.

Not all of this, I should say, is terrible. Getting rid of the Federal Family Education Loan Program — which backs loans coming from ostensibly private companies and guarantees lenders a profit — is a good thing. But replacing it all with loans directly from D.C.? That’s a bad thing.

To be fair, transitioning from guaranteed to direct lending could save some money, especially in the short run, eliminating various fees and guarantees Washington pays to lenders under FFEL. But those savings almost certainly won’t be the $87 billion over ten years supporters claim, a number that is no doubt overstated as a result of budget chicanery and how quickly government grows. And don’t expect taxpayers to benefit from whatever savings are ultimately generated. According to the proud declaration of SAFRA sponsor George Miller (D-CA), only $10 billion of the projected $87 billion savings is slated for deficit reduction. The rest — breathtaking deficit be damned! — is going to standard, feel-good government spending, including school “modernization” projects and “early learning” grants

Which brings me to the community college components, which have, unlike the rest of the bill, been getting some media play. I wrote about them earlier this week, noting especially that they make little sense in light of Bureau of Labor Statistics numbers showing that positions requiring on-the-job training will grow in much greater numbers than jobs requiring at least an associate’s degree. What I didn’t mention was the dismal performance of community college students, who take remedial courses in droves and complete their programs at very low rates.

Ah, but we’re told that this new legislation, backed wholeheartedly by the Obama administration, is going to reform community colleges. As David Brooks celebrates in his column today:

The Obama initiative is designed to go right at these deeper problems. It sets up a significant innovation fund, which, if administered properly, could set in motion a spiral of change. It has specific provisions for remedial education, outcome tracking and online education. It links public sector training with specific private sector employers.

Now, I thought Brooks was supposed to be a seasoned political observer, but he seems to have swallowed the reform-y rhetoric hook, line, and sinker. He’s seasoned enough, though, to give himself an out with the qualifier, “if administered properly.”

He’s gonna’ need that out, though the reform failure probably won’t be primarily administrative; the legislation itself offers gaping holes through which schools can escape real reform. To get “innovation” grants, schools would simply have to agree to do such nebulous, input-centric things as provide “student support services” and implement “other innovative programs.” In other words, they’d need do nothing meaningful at all.

Unfortunately, this bill will probably become law. Few politicians or interest groups are standing firmly against it, and with health care storming the public’s front door, few people will notice SAFRA tiptoeing through the back. Combine that with the few people who are writing about the bill giving it little critical thought, and its passage seems assured.

The Biggest Leeches Always Live

By proposing to eliminate the Federal Family Education Loan Program, President Obama has raised a pretty big ruckus in the relatively staid world of higher education policy. For the uninitiated, FFELP uses taxpayer dollars to essentially guarantee profits to participating financial institutions, and to keep student loans cheap and abundant. 

Since neither corporate welfare nor rampant tuition inflation are really good things, getting rid of this beast would be a welcome move. Unfortunately, the president wants to replace FFELP with direct-from-Washington lending and to plow the savings into Pell Grants, so there’ll be no savings for taxpayers and probably very little beneficial effect on college prices. 

As I wrote on NewMajority.com in May, no one should expect big lenders to get kicked off the federal gravy train:

[T]he Obama administration is saying they’d keep private companies as servicers of loans to maintain quality customer service. Of course, this could very well be worse than the status quo: It will likely keep at least the biggest current lenders (read: Sallie Mae) at the political trough, but Washington will be THE lender for all students.

Right I was! Or, at least, signs of my prescience keep getting brighter:  Despite Obama promising to go to war against an ”army” of lenders’ lobbyists, the U.S. Department of Education just awarded Sallie Mae and three other big lenders lucrative contracts to service federal loans. So while smaller leeches could very well be removed from their supply of taxpayer blood, the biggest will keep on sucking!