Schooling Dubya On Student Loans

President George W. Milhous Bush says here that…

"Congress needs to pass legislation that would give my administration greater authority to buy federal student loans," Bush said. "By doing so, we can ensure that lenders will continue to participate in the guaranteed loan program and ensure that students continue to have access to tuition assistance."

I think that statement gives us the order of Dubya’s true priorities here, by the way, namely that lenders come first and students second (and as you'll see, Dubya typically misses the boat when it comes to "guaranteed" loans).

Interesting, isn’t it, how our “don’t know much about nothin’ at all” leader (apologies to Sam Cooke) has now become a cheerleader of sorts for students to receive affordable aid for advanced education.

As this Village Voice article from January 2006 tells us, though, that was not always the case. Here’s a brief history: President Clinton tried to end the federally guaranteed student loan program in 1993 (guaranteed loans cost students more, of course), in favor of “direct” loans in which the Department of Education would receive U.S. Treasury funds and thus cut private lenders out of the picture.

As you can imagine, the private lenders howled (including Sallie Mae CEO Albert Lord), so both guaranteed and direct loans remained available. Eventually, though...

Along with other student lenders, Sallie Mae sued Richard Riley, then secretary of education, in 2000, for offering discounts on interest rates and fees for Direct Loans in an attempt to keep the program competitive.

The case became moot, though, after the 2000 election. President George Bush appointed William Hansen, the CEO of the Education Finance Council, another plaintiff in the suit, to be the deputy secretary of education. Bush's election, says the official, was the beginning of a war of attrition in the Office of Federal Student Aid, and by extension, the Direct Loan program. "The people Bush brought in told us we were no longer allowed to give speeches, talk to colleges, publish any brochures or reports, make any hires," he says. "The annual Direct Loan conference was canceled. Our communications person wasn't allowed to talk to the press without a [Bush] appointee in the room. You almost had to ask permission to go to the bathroom, and you never, ever got it."

...

Ten years of government data now show that the guaranteed student loan program costs the government 10 times as much as Direct Loans, including administrative expenses. Yet since 1998, Direct Loans have dropped to just 23 percent of all student loans—a proportion that, in today's larger student loan market, translates to not quite $14.8 billion.

The story also tells us that, in 2004, Sallie Mae’s market share beat out that of the Direct Loan program for the first time. However, last September, Dubya signed a Democratic-sponsored bill slashing subsidies to private lenders after “months of scandals involving kickback schemes and conflicts of interest among lenders and college officials” became apparent, including some rather unsavory doings with a certain U.S. House Minority Leader here.

I don’t have an approximate number on how many billions were wasted by the Repugs’ favoritism towards private lenders at the expense of the direct loan program sponsored by President Clinton, but I’m sure it is a typically eye-popping number.

So, as with so many other issues, Dubya would do well to shut his pie hole instead of trying to assume some imaginary rhetorical high ground on the matter of student loans. The habitual profligate waste sponsored by his party to which he cast a blind eye for so long would make a person of even slight moral and intellectual means blush with shame (though a delusional narcissist like our preznit is incapable of such reactions, as we know all too well by now).