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The End of Free Money (For Some)

March 25, 2010

Tucked in with the healthcare package, Congress also passed student loan reform. This has been a no-brainer for sometime now. Under the previous system, banks gave students loans that were guaranteed by the government. If students couldn’t pay, the government covered the loan. And *poof* free money!! Since the previous system was essentially the government lending students money through banks, and since there is already a system in which the government lends money directly to students, Congress decided to use all the money spent on student loans in the direct loan program, so that they didn’t have to pay for bank profits. The change will save taxpayers $61 billion over 10 years.

Here’s the Republican pushback:

“The Democratic majority decided, well look, while we’re at it, let’s have another Washington takeover,” said Senator Lamar Alexander, Republican of Tennessee and a former federal education secretary. “Let’s take over the federal student loan program.”

Did he just criticize a government takeover of a, um, government program? Presumably, a fiscal conservative such as Senator Alexander wants taxpayer dollars spent in the most effective manner. His resistance to the change is puzzling.

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