Tuesday, December 20, 2005

Student Loan Programs and Knee-Jerk Reactions

I teach at a university. It goes without saying that students and faculty are quite supportive of government-backed student loan programs. Not so many weeks ago my e-mail box was literally “stuffed” with dire warnings that Congress was bent on gutting those programs and that the hour had arrived when all good (wo)men would rise to the defense of higher education. Now, I admit I was about to rise up in righteous indignation and vent my wrath upon these evil-do’ers when it struck me that, if they were indeed determined to do what they were accused of, they were not evil, they were downright stupid!

My reasoning was as follows. The republicans control Congress. Any bill reducing federal support to student loans would therefore require a good deal of republican support. The future of both parties lies in the hands of the next generation. That generation will be led by those currently in college. These future leaders would be the most harmed by reductions in student loan support. So, any party reducing that support was sacrificing its future. Stupid!

Now, I grant you that the republicans have been accused of being stupid, but the source of the charge is their opponents. A claim about a person coming from his enemy is never a claim that I trust. So, I decided to do some _minimal_ research. Here is what I discovered.

The changes to the law that the republicans are (still) considering would _stop_ student loan interest rates from increasing from 4.7% to 6.8%. Apparently, the law in effect would raise them to the higher rate in July 2006. There are also some savings that will accrue to the federal government. The best that I can tell, they do not come at the expense of students, but rather banks making the loans. It seems that under current law some private lenders have been receiving a 9.5% rate of return from the federal government on student loans. This is a subsidy that was necessary during the years of high inflation in the early 1980s. Current inflation rates no longer require such an extraordinary government subsidy to the banks. So, it is being ended. Further, the proposed law would _increase_ the maximum amount of subsidized loans that students can borrow from $2,625 to $3,500 in their first year of college, and from $3,500 to $4,500 in their second year.

I admit that further research might yet reveal some real harm to students, but I rather doubt it. Even if it does, the benign effects of the intended changes listed above should at least be considered before making a decision on the bill itself.

What concerns me more however is the knee-jerk reaction that the mere idea that Congress was even going to look at the student loan program engendered among students and faculty. No one bothered to check the facts; they simply rushed to the defense of the status quo in much the same way that senior citizens do when Congress takes a look at social security.

If there is any evil here, it is that so many can be roped into unthinking defense of the status quo. If the republic is to last, it must have a citizenry capable of reasoned debate. Engaging in political action without information is not reasoned debate.

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