Over at The New America Foundation, where they sometimes seem to think fairly clearly and oftentimes seem to miss the mark, they're blasting the default rate issue of FFELP vs Direct Loans. Their analysis draws the conclusion that free-market enterprise is to blame here. Alas, it's poor government policy. You see, the free-market will constantly seek to test the best use of capital and entrepeneurship. The answer is to tighten up sloppy policy....just the the market do what it does best, you can't fight it.
We were deeply saddened today to see that Drexel University acquised to Cuomo's strong arm tactics. Cuz Drexel had a sure thing. But when you have an unlimited budget to misapply prosecuting and badgering companies, sadly the defendants will spend more money to clear their name than settling.
1 comment:
In the higher ed field there seems to be an extremely-loose usage of terms such as private and public sector. Guaranty agencies and secondary markets are state governmental agencies -- often using tax-exempt bonds as well. Lenders receive state GA insurance and federal govt reinsurance in addition to a guaranteed quarterly return. DL uses private-sector contractors. The distinction of which of the two programs, FFEL and DL, is private and which is public is not quite so facile as the pundits state in their sound bites. DL is arguably more private sector oriented.
The level of customer service, technology, standardization, etc., in FFEL, was abysmal before DL was started. For example WSJ/Smart Money, March 1996 ("Bureaucratic bumbling. Antiquated computer systems gone wild. Misplaced paperwork. Thuggish collection agencies. It’s just another day in the student-loan business.") Who’s to say it won’t return to that crisis situation after DL is gone? Lenders and schools faced a turning point in the early 1990s. They could have admitted their abysmal failure in delivering and servicing student loans, entered the Twelve Step Program, supported serious GSL reforms, and completely avoided the creation of DL. Instead, they decided to pursue the lobbying route, trying to defeat the DL idea legislatively rather than substantively. As a result of this strategic error, they almost lost the whole FFEL program. It sounds like they are willing to roll the dice again on beltway gamesmanship instead of admitting their problems. Maybe the problem was using the feckless Ed Dept instead of some other agency for handling student loans. People tend to sit up and take the IRS more seriously. In Australia the student loans are collected via payroll deduction and the national tax agency.
Post a Comment