SAFRA HEADED FOR THE HOUSE FLOOR…. We’ve talked a bit about the Student Aid and Fiscal Responsibility Act (SAFRA) before. I continue to think it’s a no-brainer. The student-loan industry is getting government subsidies to provide a service the government can perform for less. The Obama administration has asked Congress to remove the middleman, streamline the process, save taxpayers a lot money, and help more young people get college degrees.
The NYT‘s Gail Collins had a good column on the bill today, which as she noted, is “pretty easy to explain.”
It would simplify the federally guaranteed loan system, save an estimated $87 billion over 10 years and use that money to increase aid to low-income students, improve community colleges and raise standards for early childhood education.
Let us stop here and recall how the current loan system works:
1) Federal government provides private banks with capital.
2) Federal government pays private banks a subsidy to lend that capital to students.
3) Federal government guarantees said loans so the banks don’t have any risk.
And now, the proposed reform:
1) The federal government makes the loans.
Wow. You really do wonder why nobody came up with this idea before.
Well, in fairness, the Clinton White House came up with the same idea, but Republicans and industry lobbyists went berserk and the plan had to be scaled back.
They’re throwing another fit this year, but for now, the bill seems to be on track. Honestly, the GOP opposition on this is just embarrassing. The same folks who demand cost savings, improved efficiency, and streamlined government programs, are nevertheless opposed to a common-sense idea that achieves those very goals. Some of the Republicans are no doubt swayed by industry campaign contributions, some just reflexively oppose everything Obama administration supports, and some would rather have an inefficient private system than a superior public system for purely ideological reasons.
Fortunately, opponents appear to be losing this fight. The House is set to vote on SAFRA this afternoon, and the prospects look pretty good. It often goes overlooked, but President Obama’s top three domestic priorities for this Congress are reforms on health care, energy, and education. That makes today’s vote pretty important to the White House.
It’s also pretty important to the country. As always, readers can keep up on this and other higher-ed-related issues at the Washington Monthly‘s college guide blog.