In a piece for the print magazine that examines how liberals have an opportunity to change government, I took a look at the Federal Student Aid Office. Instead of subsidizing an unnecessary industry, liberals could simply "put students first. The FSA could use its power to simplify the confusing student-loan programs and advocate for more use of the Federal Direct Loan Program, which cuts out private-lender middlemen to provide loans directly to students. This could save the government millions -- while at the same time increasing access to higher education." I should have written "billions," but as Dana notes, the president's new budget calls for exactly that move. Making the change has been a progressive priority for years and the inclusion of this provision in the budget is one more indicator that this is a progressive administration.
Estimates of savings from the federal direct lending program are a healthy $4 billion a year. The politics of the debate that will no doubt ensue around the change will be fascinating. The student lending lobby shells out to members of congress to keep their subsidies (House Minority Leader John Boehner and Ranking Education Committee Member Howard "Buck" McKeon are two major recipients). But many of the same people who receive lender dollars are also self-styled budget hawks. Wondering how they'll ever be able to reconcile their support for corporate subsidies with their hopes for a smaller budget? I won't keep you guessing: Betcha they come down on the side of the former.
-- Tim Fernholz
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