No More Student Loans? Good.

By Ted Rall

First came school vouchers, subsidizing private schools with public money. Now, as the economy contracts, the government faces mounting pressure to pour increasing amounts of our tax dollars into private colleges and universities as well.

The push comes from two fronts: a desire to make sure that student loans keep flowing in spite of the credit crunch, and to raise benefits for veterans returning from Iraq and Afghanistan who are guaranteed an education under the GI Bill.

Student loans are a big segment of the banking industry, amounting to about $85 billion last year. Until recently, they were also hugely profitable. But the credit crunch has caused some lenders to pull out of the federal program. As a result, the pool of money for college loans available has fallen 13 percent.

Congress is considering various ways to make sure students can continue to borrow the money they need. The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) would increase the amount lent directly by the government. Another Senate bill, supported by Bush, would let the government buy student loans from banks to free up capital for additional loans.

Other bills seek to make college more affordable for veterans, many of whom say they are getting screwed. "They were rather good at saying, 'Join the Marines and get an education; you'll have an opportunity to go to college,'" recalls Kevin Grafeld, 23, a part-time student from Long Island, New York. Despite serving five years in Iraq, he gets a mere $875 per month--not even enough to pay for the community college he attends as a part-time student. "I was 18 and a little naïve," Grafeld told Newsday. A bill sponsored by Jim Webb of Virginia, a Democrat, would pay for tuition up to the cost of the most expensive public university in a veteran's home state, plus room and board.

How much would these bills cost? It's like Iraq: no one knows. Sponsors say the feds would actually come out ahead on ECASLA, earning a cool $450 million a year in interest and fees on the backs of college kids.

I have a better idea. Do nothing.

Student loans aren't a solution to skyrocketing tuition. They're its cause.

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