While the [student loan] system has been lucrative for Sallie Mae, it has been downright harmful to the students and taxpayers whose interests federally guaranteed student loans were supposed to serve. Students assume the debt; taxpayers bear the risks, and Sallie Mae reaps the rewards.
She is dead on in her criticism of Sallie Mae causing me once again to wonder why there aren't more of a fiscally conservative/libertarian arguments about the waste in the student loan programs. There is broad political interest in more efficiently using federal resources. The question this column begs is what's her solution?
5 comments:
Personally, I wouldn't flack for Ms. Carbone, because she probably wants to do away with government-subsidized student loans entirely.
One more point. Carbone writes, "SLM reaps the rewards of providing a service for which there is great demand, but the taxpayers cover many of its risks -- and losses."
So true! The taxpayers do cover many (but not all) of the risks. On the other hand, in the Direct Loan program, the taxpayers cover ALL the risks.
The guaranteed student loan program is an imperfect, but still very effective public-private partnership.
Conservatives and Libertarians don't pile on Sallie (or anyone else for that matter) because they believe in personal responsibility.
Who is to blame for credit card debt - Macy's? Blockbuster? Domino's?
The same is true with student loans. Real Libertarians and conservatives believe (1) that colleges are to blame for the outrageous cost of college and (2) that no one is holding a gun to students head and saying - "take out this loan" or "buy this IPod" or "take six years to finish your undergraduate degree."
Take some responsibility instead of blaming everyone else!
I think it's an open question what Ms. Carbone thinks. In the late 1990's William Niskanen, head of the libertarian Cato Institute, came out in favor of Direct Lending as an efficient way to provide student loans and a valuable program. If it isn't a libertarian tenet, then it's certainly a fical conservative tenet that you should use your scarce resources as efficiently and effectively as possible.
I think the conservative tenet Luke cites--"use your scarce resources as efficiently and effectively as possible"--ought to be the standard for judging the student loan programs. Which program at the end of the day more efficiently and effectively funds, delivers, services and collects student loan dollars, is really the only thing that is important.
Thanks for the Niskanen reference.
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