Sen. Judd Gregg sez Obama’s plan to cut out the greedy private loan sharks and provide student loans directly won’t work. Back in the ’90s, see, there was this celebrity death match between publicly and privately administered loans, and look what happened, bitches:
“We agreed to level the playing field, put both plans on the playing field at an equal status and see who won. Well, private plans won. Big time.”
Oh, yeah. Suck on that, Obama!
I know a lot of political reporters tend to think of Gregg as one of the more serious Republican lawmakers when it comes to reality, but the guy simply doesn’t know what he’s talking about.
When Clinton compromised in the ’90s and created a level playing field, colleges were allowed to choose between direct loans and guaranteed loans. Private plans lost, big time, for quite a while. Eventually, however, the tide turned, and colleges shifted away from the public plan.
Was it because the private sector was superior? No, it was because the private sector was bribing college-loan administrators.
[I]t now turns out that the private lenders’ success came not through superior efficiency but through superior graft. The emerging college-loan kickback scandal is a vast scheme by private lenders to bribe colleges into foisting their services onto students. Lenders plied college-loan officers with meals, cruises, and other gifts. Some loan officers were given lucrative stock offers. Columbia’s director of undergraduate financial aid purchased stock in Student Loan Xpress — which became one of that school’s preferred lenders — for $1 per share and sold it two years later for $10 per share. Some lenders offered millions to the universities themselves to drop out of the direct-lending program.
So this whole scandal could have been avoided if Bill Clinton had just gotten his way…. Indeed, the very thing that drove conservatives to oppose Clinton’s reform — the vast private profits made available by guaranteed loans — is what enabled the scandal.
We’re quickly reaching the point at which we should effectively assume the opposite of whatever Gregg is saying is true.
When you have to bribe the ref, I don’t think you can claim to’ve won “big time.” Just sayin’.