Student Loans

September 22nd, 2009

The student loan program has for a long time consisted of two parts, the National Direct Student Loan (NDSL) and the Guaranteed Student Loan (GSL). With the NDSL, the government made direct loans to students. With the GSL, banks make loans to students (generally with money borrowed from the Fed), repayment of which was guaranteed by the Federal Government, a no-risk, high profit business. Republicans have periodically  tried to eliminate or scale back  the NDSL (so the bankers’ GSL program wouldn’t have to compete with it), in spite of the fact that it costs the government less and provides more benefits to students. As described in the article “A Political Idea Warp” (Washington Post 9/21/09), the Democrats have proposed eliminating the GSL program (the bill has passed the House, with only 6 Republicans voting for it). In spite (or maybe because) of the $80 billion savings, “conservatives” are against cutting out the financial middle-men who are now receiving millions in subsidies from the Federal Government without assuming any risk. They don’t like actual welfare, but the corporate variety is fine.


The student loan program had two components:

One direct (run by the government), one indirect (run by banks).

But when too many students kept choosing the public option

The latter became the former’s opponents.


The government lent money to students

At a very low rate.

Its administrative costs were low.

Everything was great.


Then Republicans (at the banks’ behest)

Did what they and the banks thought was best,

Repeatedly trying get rid of or limit direct lending.

They didn’t care about the extra money

Both the government and students were spending.


The banks lent money to students

Which they got from the Fed.

If the students defaulted

The government paid instead.


The banks made lots of money.

For them, it was great.

They lent out the government’s own money

At a much higher rate.


Banks made profits galore

Without any risk.

It’s a capitalist’s dream.

Business was brisk.


Then along came Obama

And said this is irrational.

Why subsidize banks to charge students more?

Let’s go back to NDSL.


The banks screamed bloody murder.

And the Republicans too.

“It’s a government takeover!”

And that’s a taboo.


See, we liberals are slow.

We don’t comprehend

Why privatization is good

Even if it costs more in the end.


The world looks different

Through the Republican prism.

Corporate welfare is good.

Helping people – that’s socialism!


But it’s fine for the private sector

To suck on the government teat.

That’s just good business.

And business can’t be beat.


Republicans are always trying to privatize

Government institutions

Because government doesn’t

Give campaign contributions.


With corporate welfare,

They don’t care if there’s waste.

When their friends make money,

They get a taste.


The government should act

In the public interest.

In which Republicans

Don’t take an interest.


It’s the same with healthcare.

The Republicans don’t care about us.

They’d just as soon throw the public

Under their “Hands Off Our Healthcare” bus.


So when Republicans try

Everything public “socialism” to christen…



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2 Responses to “Student Loans”

  1. Newsericks » Blog Archive » Hey Big Lender Says:

    […] follow-up to my earlier piece about student loans, inspired by Senate holds up plan for student-lending overhaul : Ending banks’ role in […]

  2. Newsericks » Blog Archive » Privatization Says:

    […] Here’s your theme music for today, accompanied by a video I made about tax policy (go to the appropriately named My Worst Video for more background on that video and the issues therein presented). But while the video might be boring (it’s hard to jazz up tax policy), the song (You Can’t Always Get What You Want certainly isn’t. Check out the MP3 or other Rolling Stones stuff in our Amazon store, or  download it for free with the Real SuperPass free trial. For more on privatization, read our earlier piece on student loans. […]

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