The furor over President Obama’s trillion-dollar restructuring of American health care has left his other trillion-dollar plan starved for attention. That’s how much the federal balance sheet will expand over the next decade if Mr. Obama can convince Congress to approve his pending takeover of the student-loan market.
The Obama plan calls for the U.S. Department of Education to move from its current 20% share of the student-loan origination market to 80% on July 1, 2010, when private lenders will be barred from making government-guaranteed loans. The remaining 20% of the market that is now completely private will likely shrink further as lenders try to comply with regulations Congress created last year. Starting next summer, taxpayers will have to put up roughly $100 billion per year to lend to students.
Our economy could maybe (if we try very very hard and get very very lucky) survive the trillion dollar hit from health care reform, but what about a second trillion dollar hit for student loans? Obama’s world sounds increasingly like late night ads for diet plans: eat all you want and still lose weight! What next – free Escalades for all? Few seem to recognize that every increase in the national debt must be balanced by a decrease in living standards. I don’t understand the appeal of greatly reduced circumstances in return for different health care and an indifferent education.