Government Higher Ed Takeover Looms, NAS Reports

Ashley Thorne

On most Americans’ minds this week is the president’s push to pass the “reconciliation” bill, which contains Obama’s health care bill. What most people don’t realize is that another bill has been stealthily bundled in the package: direct student lending. If passed, direct lending will put loan companies out of business and will force students who need loans to borrow directly from the government. 

Solomon in his wisdom wrote that “the borrower is the slave of the lender.” In that sense, the direct lending bill will make the majority of college students slaves of the federal government. This past week NAS president Peter Wood wrote two major articles drawing attention to this bill. In “Obama-Care Meets Obama-Ed,” he showed how the administration is positioning itself to take control of the student loan industry. True, in recent years, private lenders have been caught in bribery and other various kinds of corruption. Kickbacks from particular lenders have prompted colleges to guide students into disadvantageous loans.  

But the takeover of student loans will give the government dramatically expanded control over higher education as a whole. As Dr. Wood wrote, “If the legislation passes, we may well be trading a flawed system for a disastrous one.” In his second article, “Obama Loans, Who Collects? The Not-So-Hidden Dangers of Federal Direct Student Lending,” he paints a picture of what federal control of higher education could look like in practice. One real danger is that the government could decide to über-enforce separation of church and state by banishing religious thought from college curricula. It could decide to make adherence to Title IX in all its quota-mandating weirdness a criterion for funding. And it could require colleges and universities to demonstrate commitment to ideologies such as “diversity” or “sustainability.”  

Some major bloggers picked up these two articles. Instapundit linked to both and so did Powerline Blog (see When Obamacare Met Obama-Ed, Part 1 and Part 2). Gary Larson at Intellectual Conservative quotes Dr. Wood in “Taking Over Student Loans...Or Bust!” And John K. Wilson disagrees with him on his blog, College Freedom.  

While the potential consequences (outlined above) of such a bill are most likely unintended, the fact remains that legislators haven’t taken the time to consider what could happen to higher education if it is put into practice. Direct lending could give the government a stronghold in the university and the next generation that will be difficult if not impossible to restrain. As Dr. Wood puts it, "My point is that Direct Lending creates a huge opportunity for mischief, and the mischief-makers will figure that out soon enough." 

Update 3/18/10: Steven Spruiell at National Review Online reports that the student loan bill is being bundled into the reconciliation bill because the Senate wouldn't pass it on its own and because funds from direct lending can be used to finance the new health care legislation. And U.S. House of Representatives member Cathy McMorris Rodgers says this bill is a step toward government control of Americans' lives. 

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