The New York Times is reporting that Lobbying Imperils Overhaul of Student Loans, an unsurprising outcome for anyone following, well, anything for the past thousand years of American politics. Yet, this story--though still unfinished--offers sobering parallels for the debate that dominates much of our thinking in progressive circles: health care reform.
According to the article,
The money that would be saved by cutting out the private-industry middlemen — about $80 billion over the next decade, according to a Congressional Budget Office analysis — could instead go toward expanding direct Pell Grants to students, establishing $10,000 tax credits for families with loans, and forgiving debts eventually for students who go into public service, administration officials say.
To my thinking, this has been one of the better--and simpler sounding--ideas to come out of the Obama candidacy and presidency. Who could look at this and not see it as a win-win-win for just about everybody? Students win, deficit hawks win, hard-nosed rational economists who want to streamline economic activity...you get the idea. Students (and their ATMs, errr, parents) win by not having to navigate a tangled web of competing loan offers, interest rates, repayment terms, and all the other baroque elements that come with financing such vast sums of money. The government balance sheet wins by ending expensive subsidies, instead going into what should be a net-positive series of transactions, offering direct loans to students in need. The whole process, if designed and managed correctly, should be simpler for all parties, colleges, students, those tallying up governmental expenditures. No one can be sure what the effect would be on the underlying cost of higher education; student loan subsidies no doubt urge the cost of college up as does the ever-increasing pool of those who want to be eductated. Would a new government-run regime drive up costs even more? To be honest, we have to admit that it's a possibility. But even then, most people see education as an investment; if so, it should be worth the higher cost.
Yet this sensible idea, one that has been relatively free from high-noise controversy and political grandstanding could be derailed by intensive lobbying from the likes of Sallie Mae:
But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril, with lenders using sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business.
This is yet another case where entrenched business interests and the money/speech that they can muster stand in the way of a proposal that offers relief for large swathes of the American people, budgetary savings, and quite possibly the beginnings of a large reinvestment in something that would stand to move our economy forward in the long-term: expanding access to education.
The parallels to the health care debate are unmistakable: here we have a proposal that saves everybody money and offers better outcomes relative to the dollars spent. That streamlined approach is achieved by eliminating the middlemen who do little else but drive up costs. Their entire stated raison d'etre is that they offer choice and competition, catchphrases that are rendered meaningless in the face of a market that doesn't want to be a market. Students don't want to shop for loans, they just want the loans. Similarly, people don't want to shop for insurance, they just want the guarantee that the money will be there to pay for the doctor when the time comes. Yet corporate money flows into the issue, and
good ideas that offer cost savings are diluted, compromised, and dropped entirely. Folks, if we can't simplify student loans, how are we going to get health care done? How can we unshakle ourselves from the influence of corporatism in policy making?