It's Republicans, who adopted the student loan "industry" in its infancy, like a stray cat, and have nurtured and protected it ever since. There actually is a parallel student loan program that uses government funds. It was started in the early days of the Clinton administration. It costs less to operate, and it has not been tainted by scandal. But when the Republicans regained control of Congress in 1994, they pushed through a law forbidding the Education Department to encourage use of this program. As a result, direct federal loans account for only 25 percent of all student loans.Because that would be socialism? Or maybe just because it isn't as profitable. Kinsley notes the prevalence of kickbacks where prestigious universities accept payments to push this more expensive loan program.
But this is best when he dissects the supposed capitalism here.
But why do Republicans love student loans? Oh, there are the usual reasons: lobbyist and campaign contributions. There is almost sure to be at least one of these firms -- the local bank, if no one else -- in their district. But there is more. Student loans are the clearest example of the common Republican confusion between free-market capitalism and business. Capitalism is an economic system that is held, with some justification, to be the best guarantor of prosperity. Business can be capitalism in action, or it can be something entirely different. There is very little about the student loan program that has anything to do with free-market capitalism. Yet whenever the student loan system comes under criticism, lobbyists, "industry" leaders and supportive politicians haul out the same old cliches, as if they were defending Adam Smith's famous pin factory itself.When you add that to the Bush people quashing mad cow testing by private companies wanting to set themselves apart, or the role that Haliburton plays in our Iraq disaster, or the sheer unwillingness to allow for the cost of environmental cleanups to be included in operating costs, you realize that they don't understand free-market capitalism at all. Nor, it seems, do they care to. And here, in the one thing that can help people alter their lives in a fundamental way--through education--Republicans either cut loan programs or make sure they are more exploitative.