The Old College Try

As I mentioned last week when the President's NAACP speech focused so much on the President's education agenda, it would be nice to see Congress act on it and start filling in the legislative details of the proposal. As Steve Benen notes, we're starting to see some of that this week now with Congress taking a look at eliminating the federal student loan cash cow for the banking industry.

It should be a no-brainer. The student-loan industry is getting government subsidies to provide a service the government can perform for less. The Obama administration has asked Congress to remove the middleman, streamline the process, save taxpayers a lot money, and help more young people get college degrees.

Yesterday, we started seeing some meaningful progress on the issue.

A bill that cleared a House committee Tuesday would largely remove private lenders from the federal student loan industry, generating an estimated $87 billion savings over 10 years to fund more government grants and loans.

The Student Aid and Fiscal Responsibility Act of 2009 would eliminate an entire category of student loans issued by private lenders and subsidized by the federal government, vastly expanding direct lending by the government starting next July. Democrats would use the savings to fund a $40 billion increase in federal Pell Grant scholarships over 10 years, $10 billion in community college upgrades and $8 billion in pre-kindergarten changes, among other uses.

Republicans opposed to the legislation say it amounts to a federal takeover of student lending.

Look, the government already controls the entire lending process -- it helps students directly and it subsidizes private companies to direct funds to students. All Obama and his allies want to do is make the process more efficient and cost-effective. And all Republican critics of the idea want to do is keep the middleman in place to maintain the ideological facade of a "private" system.

Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, said yesterday, "We can either keep sending these subsidies to banks and a broken system, or we can start sending them directly to students and their families."

Note the eerie similarities between the current federal student system of subsidies to private lenders and then private lenders offering services at a profit, and the proposed GOP health care plans, where the GOP wants to offer subsidies (in this case tax credits) to consumers, and then they turn around and give that money to the insurance companies. It's enriching the private sector by putting in a middleman to the process. The GOP doesn't mind middlemen and layers of additional bureaucracy as long as it's made up of private sector industries getting their cut. If we take the private sector middlemen out of the equation, the GOP gets all testy and screams GOVERMENT TAKEOVER.

Student loans aren't a jobs program for banks, guys...especially after we've fully established that the financial industry has no clue what they are doing. I'm all for this legislation. Let's recoup some of that taxpayer money we've given to the banks.