In today’s Wall Street Journal, Education Secretary Arne Duncan argues that “Banks Don’t Belong in the Student Loan Business.”
What he’s against are federally subsidized bank loans for college students. I’m with him on that. Governmentally subsidized college loans are just as bad a policy as governmentally subsidized home loans.
The trouble is that Duncan wants to get rid of the subsidized bank loans so the feds can make even-more-subsidized direct loans, so that more students can “realize the dream of getting a college education.” Oh, please. Few young Americans dream about college education. They want (and generally feel entitled to) a college degree. Cheap loans help to lure many kids into college who would be better off elsewhere. They’ll coast along, perhaps obtaining a degree eventually, and will then find that the labor market is glutted with people holding BAs. They often wind up doing jobs that most high-school kids could easily learn.
Besides, nothing in the Constitution authorizes the federal government to lend money.