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Tuesday, December 12th 2006

Take That Interest Rates

Cutting education loan rates was one of Pelosi’s 100 hundred hour promises. And we get closer to it as the new Congress gets ready to come in.

Democrats, who won the House and Senate in last month’s elections, say they will quickly move to slash interest rates on need-based college loans in half — from 6.8 percent to 3.4 percent.

“That will be done almost immediately, certainly within the first couple of weeks of the new session,” California Democratic Rep. George Miller, the incoming chairman of the House education committee, said in an interview.


Senate Education Committee Chairman Promises To “Throw Down” With Interest Rates

And who will they pay for this?

Democrats haven’t spelled out how they’ll pay for their promises, which may run head-on into another pledge: to require any new spending to be offset with cuts elsewhere or new taxes to avoid increasing the deficit.

Miller and Massachusetts Sen. Edward Kennedy, the new chairman of the Senate education committee, say the government can save money by steering college students toward getting direct loans from the government instead of borrowing from banks that in turn get federal subsidies.

Not so fast my friend…

“I’ll be as blunt as possible: you will never convince me — never — that the federal bureaucracy can do a better job than the private sector in managing the student loan program,” Republican Rep. Howard “Buck” McKeon, the outgoing chairman of the House education committee, said in a recent speech to bankers.

Then the bankers all wrote him big fat checks.

The real question is…why is the government subsidizing my education in the first place? Beyond the artificially low interest rates on my loans, somewhere in the neighborhood of 75% of the cost of my education is funded by the state. Not only should “public good” be defined narrower than training doctors, but I am under no obligation to even stay and practice in Texas.

There needs to be a broader debate on this. On one hand I’m a strong advocate that this country needs more of a preventative/primary care focus to its system. Certainly, among other things, I truly believe that lower medical student debt would encourage more students to seek PC practice opportunities. On the other hand, what the hell are your tax dollars going to?

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