Democrats may attach a contentious new plan to overhaul the student loan system to the reconciliation bill that will be the vehicle to ram through their health care legislation, but as the Hill reports, that may complicate their ability to pass the health care bill.
President Obama has been pushing through a proposal that would eliminate the involvement of private companies in student lending, and instead have the government do all of the lending directly. A lot of conservatives have called this another government takeover, although my view is more nuanced because the theoretically private companies have most of their loans backed up by the federal government anyway. As I wrote last July when the bill first came up in the House, “It’s hard to shed many tears for Sallie Mae and other providers that are able to make profits by earning interest on federally-backed loans, while all of the risk is ultimately absorbed by the American taxpayers.” The Wall Street Journal editorialized against the bill yesterday, and offered reasons in favor of maintaining the private companies (such as superior customer service).
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