The Great Secret Student Loan Reform

One of the bizarrely under-hyped benefits of the passage of health care reform (the reconciliation bill, to be exact) was the much-needed student loan reform package attached to it.

Basically, since the 1960s the federal government has been subsidizing and guaranteeing student loans made by private insurers like Sallie Mae. (The government also makes its own loans to students.) The risk on these private loans was borne entirely by the government; private insurers reaped all the profits. This is exactly as wasteful as it sounds, and reform will save us $61 billion over the next 10 years. Everyone wins.

Of course, the ideological champions of private industry (i.e. the affected banks and their stooges in Congress) are now crowing that these reforms will destroy higher education. Surprise surprise – they’re completely wrong.