My View On “Arne Duncan: Banks Don’t Belong in the Student Loan Business”
First of all, the problem with your thinking (if I can be so bold) is that you make an assumption that I am financing the education of these mature students. Indirectly yes I am, but I have no vested interest in whether they succeed or not. I’d much sooner just end the program of the government providing student loans than trying to recoup my taxpayer money.
Secondly, you make an assumption that it was a specific dollar from the taxpayer that paid for this. Can you prove this? When money goes into the maw of the government, we don’t know what the government will spend the money except that they will spend it. They also commingle the money with borrowed funds so now the government is just awash with money. The idea that the student is going to repay me is ludicrous on its face. If the student were going to pay me back I would’ve loaned him the money directly on our terms. As it stands, the money was taken from me (and not surprisingly, the student because he pays taxes), put through the bureaucratic mess of government, and reloaned to the student at a subsidized rate. How is that good finance, let alone good economics? Works for the student, but who else does it work for?
And who said anything about not getting repaid? Here’s an idea: why don’t the government sell the loans to several private parties and be done with student lending. The government more than likely will lose money, but at least it will recoup enough for the student loans it held. That’s not loan forgiveness, but it is getting government out of the private lending market.
