Education reform means a lot of things, but one of the biggest problems is the gap in post-secondary educational opportunities (particularly the affordability of those opportunities) created by the staggering increases in cost for university education. President Obama wants to change this:
President Obama’s health-care goals may be garnering attention, but his higher-education proposals are no less ambitious.
At stake is a plan to expand the Pell Grant program, making it an entitlement akin to Medicare and Social Security. Key to the effort is a consolidation of student lending that would give the U.S. Department of Education a near monopoly over the practice — a proposal that has mobilized the private loan industry, which lent $55.3 billion to 6.4 million students in the 2007-2008 school year.
He wants to terminate the private Federal Family Education Loan program, the primary source of student loans. Advocates say the move is a formality: The government already effectively controls the program by guaranteeing the loans, paying a special allowance to lenders, and in recent months, buying back loans by the billions from struggling firms.
Shifting all lending authority to the government through its Direct Loan program would save $94 billion over 10 years, according to the Congressional Budget Office. Obama would use that windfall to expand the Pell Grant program, created in 1965 to cover most tuition costs for low-income students.
The Department of Education would not, actually, get a “near-monopoly” over college loans. Rather, the federal government would simply stop fully backing private loans – private lenders could continue to do whatever they wanted! The college loan industry – a large chunk of which exists as, essentially, a free government giveaway – responds by saying:
“The only reason they’re doing this is the government can make a lot of money,” said Kevin Bruns, executive director of the trade group America’s Student Loan Providers. “Private-sector lending built this entire industry, and now the federal government has piggybacked off of it.”
Kevin Burns, and the people he represents, are selfish jerks. The federal govenment does not “make a lot of money” off of college loans. The federal government is not a business. It is a collective trust that in this case is acting prudently in the specific interests of millions of citizens – in making college afforable for them – and more generally in the interests of all citizens, by making the U.S. a better-educated nation with more competitive workers and a more informed electorate. America’s Student Loan Providers did not build the entire industry, but rather have sucked at the government teat of totally-secured loans for decades, skimming pure profit without risk off the top. They are advocating for their own interests, of course, the “free money for us forever” lobby, but there’s no reason any of the rest of us should support that agenda.
Sen. Ben Nelson (D[ish]-NE) supports their agenda:
“It’s not just thinking about your state,” he said. “I have a fundamental difference in opinion thinking that all student aid ought to come from the government.”
Of course this proposes nothing of the sort – college loan providers are free to continue their business, just with a higher level of risk involved (which is to say in this case, any risk at all). It’s worth noting that Nelson also opposes expanding health care for Americans for similar reasons:
Nelson’s problem, he told CQ, is that the public plan would be too attractive and would hurt the private insurance plans. “At the end of the day, the public plan wins the game,” Nelson said. Including a public option in a health plan, he said, was a “deal breaker.”
Nebraska is of course home to a number of large insurance companies that would stand to lose their sweet business model of “making gobs of money by making sure not to insure sick people.” And it’s further worth noting that, of course,
Nelson’s state is home to Nelnet, a Lincoln-based corporate loan provider that employs 1,000 people and that has contributed generously to his political campaigns.
So that’s fine, too. Just as long as it’s clear that Sen. Nelson favors the narrow interests of one company and their 1000 employees over the future lives and possibilities for millions of Americans and the nation’s long-term economic competitiveness, as well as favoring the interests of several other companies and several other thousands of people over the health and well-being of several tens of millions of Americans who lack health care. Because he has to represent his “constituents.”
Narrowing the gap in educational access is absolutely one of the most important possible steps towards creating a more just, egalitarian society. The G.I. Bill – along with a strong labor movement and a government willing to enforce labor laws – created the United States’ middle class and drove our prosperity in the half-century following WWII, by giving formerly poor people access to good education and good jobs. Similar measures on both fronts would do the same for the beginning of the 21st century.