A couple of days ago I wrote a surprisingly upbeat blog entry about the third public draft of the federal Commission on the Future of Higher Education’s report on reforming the American ivory tower. I should have known better: Today commission chairman Charles Miller removed one of the highlights of the draft, a statement asserting that private sector lending should be a much bigger part of the college funding picture than it currently is.
Apparently, that bright spot – well, bright for anyone other than students who are trying to grab as much taxpayer money as they can possibly get their hands on – produced too much pressure for the chairman. A letter sent to him by the Project on Student Debt opposing the nod to the private sector – which I’ve boiled down to its main points below – illustrates just how persuasive the arguments by student interest groups can be:
- Private loans have no limits on interest rates. If overall market rates go up, student loan rates could too!
- Private loans have no set limits on the amount students can borrow. Like chickens without a farmer, student borrowers will apparently eat private loan money until they explode.
- Private loans don’t include all the ways for students to get out of paying them back that federal loans do. Unlike government loans, where taxpayers get stuck eating the losses when students don’t repay what they borrow, private lenders, it seems, actually want their money back.
- Encouraging middle‐class students to get private instead of federal loans won’t free up federal resources. Apparently, lots of middle‐class kids take federal loans today even though they accrue no benefits from them. So why don’t they just use private loans? Oh, right: Federal loans have artificially low interest rates thanks to being guaranteed with taxpayer money, and federal borrowers can slough off all or part of their debt on the American people.
Sadly, the Project on Student Debt’s kind of “reasoning” has prevailed in higher education policy for decades, and its letter illustrates better than I ever could why the only thing the higher education commission should recommend is that government withdraw completely from the ivory tower. Unfortunately, the chairman’s actions today illustrate another thing better than I ever could: This sort of revolting, taxpayer‐robbing, special‐interest “logic” almost always prevails in politics, and the commission’s final report will be no different.