Rep George Miller Fires Back

Last week the WSJ ran an editorial questioning Rep. Miller's student loan problem. See below for out take on the editorial and the link to the piece.

Today he responded in the WSJ. We're shocked. Well, not really shocked, Rep. Miller does spend most of his time inside the Beltway, so of course his perception is warped. But we certainly got a glimpse of Rep. Miller's view of the looming student loan crisis.

You see, Rep. Miller maintains his ignorance regarding the damage he did to the student loan industry with his Student Loan Sunshine Act legislation last fall. He flat out denies contributing to the lack of participation in the FFELP program: "...as for the recent turmoil in the student loan industry, it is not due to any act of Congress but is clearly part of the failure of the auction markets and the larger tightening of the nation's credit markets." Wow, inside the Beltway indeed.

The thing is: liquidity is there. Especially for the banks. Banks have been stepping out of the market more slowly than the monoline lenders because they do have liquidity. However, the banks are just as reactive to the profit incentive for participating in FFELP. We've said it before: no profits, no product.

Those "outsized taxpayer subsidies for the student loan industry" can either be spent for private enterprise to facilitate the student loans, or for the US Treasury to pick up the entire tab. By the way, if we're reduced to relying on the Direct Loan program to make all the FFELP loans, it will cost a lot more than those "outsized taxpayer subsidies".

And Rep. Miller finishes with: "Last year, by reducing excessive subsidies to lenders, we were able to help millions of students receive cheaper federal loans , increased grant aid, and other college benefits -- all at no new cost to taxpayers." At least that's his inside-the-Beltway perspective any way. But.....there will be no new loans.....no one is making these loans.....it is no longer profitable to make FFELP loans. Except of course the Direct Loan Program, but that will be at a cost to the taxpayer.

We're at a loss as how this is rationalized in Rep. Miller's mind or any other elected delegate who voted for the Student Loan Sunshine Act. But it looks as though no member of Congress will admit they hammered the last nail in the FFELP coffin. And without acknowledging their mistake, it will not be rectified.