US University Student Loans -- a Quick Look Through Gail Collins' Eyes. (September 18, 2009)

New York Times Columnist Gail Collins' wit gives her the ability to make her points cogently and concisely.

The following is taken from her September 17 column.

 Let us stop here and recall how the current [university student] 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.

Ms Collins concludes her column:

Two-thirds of college students now borrow to pay for college. They have a sympathetic ear in the White House. Back during the presidential campaign, there was nothing Barack and Michelle Obama talked about with more passion than the burden of student loans. Really, there’s nothing like the memory of $80,000 in debt to put fervor in your delivery.

There was a time when the Obamas doubted they’d ever get out of hock. Then Barack became a world-famous political figure, sales of his memoir skyrocketed and the family was able to pay off all the student loans.

Unfortunately, this is not a financial plan that many other people can replicate.

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*It would simplify the federally guaranteed loan system, save an estimated US$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.