Main Street

Corporations to Americans: Be Afraid!

Gail Collins of the New York Times highlights the inefficient and confusing system we currently have for college loans, in which

the government pays private companies to do the lending. The loans are then guaranteed by the government so the private companies are sheltered from loss. Then the government buys the loans back so the private companies can go out and do it all over again.

The White House believes that if it cuts out the middlemen, and just gives the loans to the students directly, it can save $94 billion over 10 years.

The middlemen, of course, are not happy, and are embarking on one of the campaigns we’re seeing so many of lately. You know, the ones in which, say, health insurance companies try to convince us to ignore the fact that poll after poll shows that people think health care reform is popular and a high priority, and that people are worried about their ability to pay the bills if someone in their family got sick or was hurt, and that more than 60% of people want Medicare to be an option for everyone. Ignore all that and be very afraid!!!!

Then you ask be afraid of what and it turns out they want you to be afraid you’ll have to wait to see a doctor—like most of us don’t already wait for that anyway—or that you won’t get to choose your doctor—like most of us already have insurance that says “oh, sure, see anyone, we’ll pay, no problem.” They want us to be afraid, in other words, of things we already face if we’re lucky enough to have insurance.

It appears that this student loan issue is very much the same. The loan companies want people to be afraid that the website won’t be as nice if it’s a government-run website. Meanwhile, recent graduates are paying as much as 19% interest on loans they got with little financial counseling when they were 18 years old. Clearly they’re sitting around going “you know, it would be nice to have a drastically reduced interest rate, but I don’t think I’m willing to exchange that for a less splashy website.”

Since the government has been looking at reforming all these institutions, it sure has been interesting to watch said institutions try to scare us into continuing to give them lots of our money in exchange for stuff they don’t seem to do very efficiently.

Tags: Education, Health Care, student loans