Last week, Washington state’s Republican senate nominee, Dino Rossi, advocated undoing the student loan reforms that passed early this year, thereby sticking bankers back between students and their federal loans (and allowing those bankers to take a generous cut of a federal program). But he’s evidently not the only one who thinks its the height of fiscal responsibility to pay private loan companies to run the federal student loan program.
During a debate last night, Rep. Mark Kirk (R-IL), who is running for his state’s open Senate seat, sang the praises of student loans and said that the 21st century economy will require more college educated Americans. But then, Kirk said that he also opposed the legislation that cut billions in subsidies to private lenders and plowed the savings back into Pell Grants:
I think as a 21st century economy we need four years of high school, and prepare kids, many more of them, to join the ranks of college-educated Americans…I voted to lower the cost for student loans and to increase the amounts for Pell Grants. I don’t think that we should adopt legislation that the Congress has moved forward to have a complete government takeover of all student loans. That eliminates options that were very much needed for students.
For one thing, Kirk seems to not realize that student loan reform has already been signed into law. But, more importantly, Kirk said he wants to make college more affordable and increase access, but two minutes later endorsed giving private lenders billions to administer the federal loan program, instead of getting that money directly to students.
After all, Kirk is simply incorrect that “all student loans” were affected by the legislation that President Obama championed and signed. Private loans are still available from private lenders all over the country. However, those lenders will no longer be paid to originate federal student loans. Not only will this save taxpayers money, but $100 billion will be pumped into the economy thanks to the increased earnings of new students who can take advantage of the expanded Pell Grant program.
Student loan demand is at an all-time high, as the cost of higher education has been going up for years. Plus, the U.S. is on-pace to be short 16 million college educated workers by 2025. With that in mind, it would be incredibly irresponsible to go back to wasting taxpayer dollars on subsidies to private loan companies, as Kirk and Rossi seem to want.