The College Loan Mess

I can't say Gail Collins is one of my favorite pundits. Most of the time she's flirting with Brooks/Broder territory or doing a bad La Dowd impression. But today she did manage to put her finger on something we've been following for awhile and she did a pretty fair job of summing up the disaster that is what's left of the govt's college loan programs after Bush's years of "privatizing", even bluntly asking the one question that actually matters.

And then, there’s the epicenter of the college loan strangeness, the federally guaranteed loans. This is a system that goes something like this:

¶We the taxpayers pay the banks to make loans to students.

¶We the taxpayers then guarantee the loans so the banks won’t lose money if the students don’t pay.

¶We the taxpayers then buy back the loans from the banks so they can make more loans to students, for which we will then pay them more rewards.

Are you with me so far? Wait, I see a hand waving back there. What’s that, sir? You want to know why the government doesn’t just lend the money out itself? Excellent question!

The White House estimates that it could save about $94 billion over 10 years if it cut out all the middlemen. And it has the basis of a system in place, since the Department of Education already makes a lot of direct loans to students.

(emphasis added)

That's more or less what used to happen. Although pre-Bush the system she describes above existed, it was a relatively small program next to things like Pell Grants and direct govt education loans through the DoEd.

But Bush - the guy who didn't want SCHIP passed because it might impact the profits of private insurance companies who wouldn't insure the kids it would have covered in any case - deciderered that he didn't want the govt "competing" in the college loan business because they, too, might see a dip in profits even though most of the kids who apply aren't rich enough to be eligible for private loans in the first place, which is why the govt programs were created.

With tuitions soaring out of sight, college is becoming something only the rich can afford.

None of these things, however, are nearly as confusing as student loans.

There was a time when kids whose parents couldn’t afford to pay for college just worked their way through. But the price has gone up so fast — more than twice as fast as inflation over the last two decades — that it’s not an option any more, unless the student in question is planning to be a sophomore through 2020, or is exploring the possibility of part-time employment in armed robbery.

Yup, that's about where we stand. Yet jobs that don't require the college degrees that poorer families can't afford to pay for have been largely moved offshore by companies eager to eliminate the threat of unionization by moving their operations to countries that kill or imprison trade unionists. So we're cutting scads of low-income kids out of college (or pushing them into forever-debt at high interest rates when we deign to let them attend) and then globalizing the only jobs we'd hire them to do.

Where are they supposed to go to earn a living? When wingnuts, who seem to identify only with the rich, get apoplectic over welfare and unemployment because, godammit, all those people should just go out and get a goddamn job, exactly what jobs is it they're supposed to get? During the Bush Era alone, some 15 million jobs were relocated overseas. They've never come back. Fewer than half that number were created to replace them, and we're still hemorrhaging jobs to the tune of thousands a month.

I mean, look at the picture: a generation of kids kept out of school who can't find jobs because American companies gave them to peasants in Sri Lanka. Does the ruling class want riots in the street?

When you take away education, you take away hope. When you take away hope, you take away any reason for people to respect the social contract. Do the math.