I came across this article and thought it serendipitous since I was thinking of this very subject just yesterday.
The good, the bad, and the Student Loan Bill
Though conservatives have uniformly opposed the legislation as wasteful, ineffective, and overreaching, the student financing part presents a complicated situation for the conservative mind.
By Derek Turner
Published March 24, 2010
Though many cheers of delight and shrieks of dismay were heard this past Sunday as Obama’s health care reform bill passed in the House of Representatives, there has been relatively little discussion of a component that has nothing to do with health care. Within the 2,000-plus pages of the bill, legislators inserted comprehensive reform of student loans and the Federal Pell Grant program. Though conservatives have uniformly opposed the legislation as wasteful, ineffective, and overreaching, the student financing part presents a complicated situation for the conservative mind.
The bill can be broken down into two parts. First, it removes a major part of the federal student loan system: private banks, which have historically been the “middlemen” for federal student loans. The federal government would offer the loans to the private institutions and insure them against student default. This system worked relatively well, but it cost the government more money to partially subsidize the process. With this bill, the banks are removed from the process, and in their place, the government will directly provide loans to students. This switch will create $61 billion in savings over the next 10 years.
The second part of the bill dictates how that $61 billion is going to be spent. About $30 billion will be spent on increasing Pell Grants (grants given to low-income college students), and about $10 billion will go toward deficit reduction. To sum it up, the government is making the process more efficient and using the proceeds to reduce the deficit and spend the rest on education. Upon regaining my breath after hearing that first bit, I began to think about the pros and cons of this bill from a conservative standpoint.
The streamlining of government is music to the conservative ear. Such consciousness of using the taxpayers’ money in a responsible way is a rarity, and reminders that it still exists in some policymakers’ minds are extraordinarily encouraging. Too frequently, the government makes very little effort to get the most bang for the tax buck. For that reason, among others, conservatives tend to want the government to remove itself completely from many parts of life, since the government seems incapable of achieving a goal in a fiscally responsible way.
However, the manner in which the government is spending the money it has saved through this streamlining sets two strains of conservatives against each other. On one hand, criticism may be in order for the government’s refraining to spend the entirety of the $60 billion on making a dent, however small, in the increasingly frightful national debt. As commentators and market watchers talk about the United States’ losing its AAA credit rating, the debt seems to be worthy of extraordinary attention. Though this specific amount may not have a large impact, it is the attitude of using every penny saved to stem the debt that should be encouraged.
On the other hand, fiscal conservatives may also argue that $10 billion is enough to direct to the deficit and that the recycling of those funds back into education is actually a wise investment in the country’s future. Except for the most libertarian-leaning, most conservatives believe that the government does have a responsibility in the area of education for its citizens. If that’s the case, then being able to maximize expenditures through efficiency would be praised, as would the use of any extra funds allocated for a better or more efficient government role. Additionally, the increase in Pell Grants will give low-income students more opportunities to attend college. From our perspective at Columbia, this could mean even more diversity of experience on campus and more deserving individuals getting the caliber of education that we enjoy.
Despite the many benefits that this reform will bring, the picture is not entirely rosy. The more direct process of giving federal loans opens the door to the bane of conservatism: regulation. In the past, the federal government has had the habit of putting many strings on money that it uses for educational programs. The No Child Left Behind program, which had the government giving money to high-performing schools, is an example. Now that the government will be the only agent giving out federal loans, it may be tempted to involve itself in the workings of the higher education institutions to which these loans will be given. This has a potential for disaster. Most universities in our country do an excellent job of educating, and the lack of regulation promotes the possibility of innovation and development that can make education even better. Should the government start putting strings on student loans to affect university policy, innovation will be cramped, and the quality of higher education could easily decline. But if the government resists that temptation, this could just be the best policy passed thus far in the Obama era.
Derek Turner is a Columbia College sophomore majoring in anthropology and political science. Opening Remarks runs alternate Thursdays.