With the prospect of President Obama’s student loan bill passing through the budget reconciliation bill fast approaching, Senator Lamar Alexander (R-TN) took to the Washington Post op-ed page to tell some lies about the bill. Alexander, who used to be the Secretary of Education and knows better, said:
Starting in July, all 19 million students who want government-backed loans will line up at offices designated by the U.S. Education Department…the government should disclose that getting your student loan will become about as enjoyable as going to the Department of Motor Vehicles.
That sounds pretty terrible, spending hour upon hour sitting in uncomfortable plastic chairs beneath soul-deadening fluorescent lights, waiting for your number to pop up on a screen so you can shuffle up to a window and listen to a surly civil service worker tell you that you won’t be able to take out a student loan because you still haven’t paid a speeding ticket issued on the Tappan Zee Bridge in November 1993. Why, President Obama, why? Can’t humble college students be spared in your diabolical collectivization plan?
In reality, getting a student loan through the Federal Direct Loan Program isn’t going be any different than it is for the millions of students who are already getting loans through the Federal Direct Loan Program, which involves filling out the same forms you use to get loans under the “give-banks-billions-of-free-taxpayer-dollars” program that Alexander is defending.
Alexander also alleges that the administration has been less than forthcoming about what’s really going on here:
Here is what they haven’t told us: The Education Department will borrow money at 2.8 percent from the Treasury, lend it to you at 6.8 percent and spend the difference on new programs. So you’ll work longer to pay off your student loan to help pay for someone else’s education — and to help your U.S. representative’s reelection.
It’s not a secret that the government will be lending money for more than that money costs. All lending programs work this way. The difference is that currently the money left over after paying people to administer the program is used to line the pockets of bank shareholders and executives whereas under Obama’s plan it will be used for Pell grants that benefit low-income students. Alexander’s contention that “you’ll work longer to pay off your student loan to help pay for someone else’s education” ignores the fact that many borrowers also receive Pell grants. Or attend the colleges that will receive grants to improve graduation rates, or have small children who will benefit from new investments in early childhood education. Alexander concedes that most people think such programs are a good idea. Otherwise, they wouldn’t help U.S. representatives get re-elected! He suggests that instead of subsidizing Pell grants, the federal government should use its unique ability to borrow cheaply to lend at extremely low rates, thus undercutting the private market for loans from companies that can’t raise money by issuing Treasury bonds. This, of course, would immediately be denounced as “socialism.”
Op-eds like this are best understood not as actual attempts to influence legislation but rather as strategic contributions to a larger narrative alleging that President Obama is engaged in grand conspiracy to drag unsuspecting Americans down the road to serfdom. It’s not true, but standards of truth are very lax when U.S. Senators write for the op-ed page of the Washington Post.