I just wanted to flag this little item in yesterday's New York Times, for the benefit of local college students and othe readers of this blog:
Four months ago, it appeared all but certain that the White House and Democrats in Congress would succeed in overhauling the student loan business and ending government subsidies to private lenders.
President Obama called the idea a "no-brainer" last fall, predicting it would take billions of dollars from the profits of private lenders and give it directly to students ... But an aggressive lobbying campaign by the nation’s biggest student lenders has now put one of the White House’s signature plans in peril.
The way student loans currently work is this: Private companies like Sallie Mae make out loans to students. But even if a student defaults, the bank carries no risk: These loans are fully backed by the government, so the bank makes out either way. Student loans are, in essence, a license to print money ... while burdening young workers with debts that can take years to pay.
There's no reason why the government couldn't just issue the loans directly -- taxpayers are on the hook anyway, and cutting out the middle man could save up to $8 billion a year. That's $8 billion coming from the pockets of students across the county -- including here in Pittsburgh. And it's money the Obama Administration would like to plow not into CEO bonus pay or shareholder dividends, but into Pell Grants and other initiatives to help students.
Can you guess where I'm going with this?
Late last year, Mayor Luke Ravenstahl proposed a "tuition tax" on students, a 1 percent levy on the cost of their tuition. Students showed up at city council meetings in opposition, while their schools took some of those hard-earned tuition dollars to buy ads in the Post-Gazette, opposing the tax. The consensus was that asking these students to pay a couple hundred bucks a year imperiled student access to education.
Ravenstahl's initiative went nowhere. The tax was shelved, in exchange for an undisclosed sum from the University of Pittsburgh and other institutions. There was also a promise that Ravenstahl and the colleges would work together on a better means of funding city operations. But based on recent utterances from university leaders, that may not amount to much: The rhetoric you hear in op-eds today is exactly the same as the rhetoric you would have heard six months ago.
(We should note, though, that Ravenstahl did hold his first meeting with colleges and other local leaders on the matter this week. It appears to have been convivial ... as early meetings so often are. Oh, and Ravenstahl's confidante John Verbanac was there, so clearly the mayor takes it seriously.)
But since the universities are so concerned with the financial well-being of the students, I'd like to suggest another coordinated effort, this one on the national front. Schools all across the country were watching to see what would happen to the schools in Pittsburgh: Now our local universities have a chance to lead by example again.
Let's see Pitt and CMU and the rest start taking out ads in the Times and the Washington Post. Let's see those passionate, principled undergrads and grad students bused down to D.C., so they can put a public face on this issue. I'll be surprised to see the universities go too far out of their way to help bail the city out of its debts. But it shouldn't be too much for them to try to reduce the debt facing their own students.