Freedom Line Blog

When it could be $87 billion.  The $77 billion swing is the difference between making a real payment towards bringing down the exploding federal deficit and a token gesture.  In today’s Wall Street Journal, Education Secretary Arne Duncan confirms a plan put in motion when the department got “emergency powers” during the credit crisis last year to continue access to student loans.  After explaining why the federal government is prohibiting private banks to participate in federal student loan programs, Secretary Duncan concludes with a cursory listing of what will be done with the projected savings.

As for the $87 billion we’ll save from ending the troubled FFEL program, the administration seeks to use that money for important programs that will improve our economic future. We propose to substantially increase scholarships in the Pell Grant program and other financial aid for low-income students. We would start new programs to raise college graduation rates and strengthen our community colleges. We will expand our investment in early childhood education. Plus, $10 billion would be set aside to reduce the deficit.

But if a little deficit reduction is good, isn’t a lot better?  Realistically, if Duncan was serious about deficit reduction he’d apply the entire savings to that end.  As it is, $77 billion of the money saved will go towards new spending in the form of higher loan amounts, “strengthening” community colleges, and “investing” in early childhood education.  None of these programs will pay for themselves in a way that off-sets their direct cost to the federal taxpayer, which, according to Duncan, is the main reason federal control in this area is needed.