Vocaboly.com

[Ray Woodcock]

An article of this title in today's New York Times
(http://www.nytimes.com/2004/06/14/opinion/14SHIR.html?th) makes some
important points. Here are a few excerpts:

Taxpayers can earn a net profit when interest paid by students exceeds
the cost of making the loans (2002-'03).

The actual cost [of the federal direct student loan program] — after
borrowers pay back the loans, after accounting for those who default
on their loans, and after the Education Department pays interest to
the Treasury for its borrowing — is estimated at $2.7 billion.

Is $2.7 billion too much to make $137 billion in loans to students?
That depends on the alternatives. Oddly, Congress hasn't asked the
G.A.O. to provide that comparison. ...

[T]he student loan industry's friends in Congress don't seem to want
to know that answer. Every independent, apples-to-apples cost
comparison — whether by the G.A.O., by the Congressional Budget Office
or by the president's Office of Management and Budget — has shown that
the direct loan program is cheaper [than making loans through banks,
which lobby for an end to the direct loan program so they can receive
guaranteed federal interest payments on student loans they make].

If all loans granted from 1995 to 2003 had been direct, more than $20
billion would have been saved, according to Bush administration budget
figures. That's enough ... to provide an extra $4,000 to every one of
the five million low-income students in college today.