DownsizeDC.org
April 1, 2010
Congressional corruption: Do education loans impact your healthcare?
By James Wilson

Congressional leaders used the healthcare bill to nationalize the student loan industry. DownsizeDC.org's One Subject at a Time Act (OSTA) would have prevented this. Please send Congress a letter demanding that they pass OSTA. 

You may borrow from or copy the following letter . . .

OSTA would prevent Congress from combining unrelated legislation into one bill, such as it did when it nationalized the student loan industry as part of the healthcare bill.

Both the healthcare bill and the student loan measure should have had to pass or fail on their own merits.

Like the so-called healthcare reform, the student loan "reform" means more federal control. We would be better off with NO federal subsidies and regulations for higher education.

The federal system of grants and guaranteed loans is already immoral and unconstitutional . . .

* It redistributes wealth from tax-paying blue-collar workers to future, high-salaried professionals http://www.downsizinggovernment.org/education/higher-ed-subsidies
* and the Tenth Amendment prohibits a federal role in education

In addition, federal meddling in education doesn't work. As the Cato Institute points out, since the federal government increased its role in higher education 45 years ago . . .  http://www.cato.org/pubs/handbook/hb111/hb111-21.pdf

* federal spending in this area has quintupled
* these tax-funded subsidies have motivated universities to raise tuition, relying on the federal government to cover the additional costs
* indeed, college costs are 2.5 times as high as three decades ago, adjusted for inflation http://tinyurl.com/y959agl
* marginal students who do not belong in college have been given grants and loans to attend, with the result that graduation rates have declined
* standards have been lowered: GPA's have increased even though SAT scores have declined
* and soaring tuition rates still disproportionately discourage the poor from attending

The so-called reform passed with the healthcare bill does have one positive aspect -- it ends corporate welfare to banks that provide federally-guaranteed student loans. But nationalizing the industry is exactly the wrong thing to do . . .

* most of the interest raised by federal direct loans to students will go to subsidize the healthcare bill, thereby making that scheme look like it expands the national debt less than it actually does http://www.cnsnews.com/news/article/63378
* taxpayers will see no net savings from this nationalization of an entire industry http://www.cato-at-liberty.org/2010/03/16/higher-education-subsidies

The federal government shouldn't "guarantee" loans, and it shouldn't make direct loans. Instead, it should end all grants and loans. This would . . .

* force banks to compete with each other in providing the best deals and best interest rates for student borrowers.
* force public and private colleges to economize and lower prices
* and encourage innovation and low-cost alternatives to conventional university education

Please introduce legislation that would transition the federal government out of higher education altogether. And most importantly, please slow down the growth of government by introducing and passing the One Subject At A Time Act.

END LETTER

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Jim Babka
President
DownsizeDC.org

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