Monday, March 15, 2010

Student Loan Reform and Health Care bundled Together

I find this ironic because the methods of financing both higher education and health care are in a general sense quite similar (3rd party payment) and both have exhibited higher than average cost growth without delivering superior outcomes. And the legislation being proposed for both appear to do little to arrest the current trend but at best will reset the baseline a little lower.

Note: The student loan reform proposes to make the government a direct lender to students. This will reduce the interest rates of the loans as they will have to cover for the rate of default but not profit. However, if the interest rates are lower then students can borrow more thus enabling Universities to charge higher tuition thus necessitating greater indebtedness yet from their students. Rinse and repeat so the cycle goes. The only thing that has changed is there isn't a middle man getting a take and for the purposes of reducing public corruption alone that is all to the good (though, during the Clinton years banks had to bid in order to provide lending services which made it a much more transparent and efficient operation). On a positive note the bill does propose plowing some of those savings (a meager amount as most of the savings are used to offset the health care bill) into Pell Grants.

1 comment:

Koozies said...

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