By Richard Vedder
The new Congress is beginning, and in the first 100 legislative hours the Democrats plan on doing half-dozen things. Some of them, like attacking subsidies to oil companies have relatively little to do with higher education, while others such as raising the minimum wage have more impact. However, one issue, reducing the interest rates on student loans, is exclusively higher education related.
CCAP sources imbedded in the Democratic caucuses tell us that January 17 is the day that Congress will take up the lowering of interest rates on student loans. While Nancy Pelosi can ram things through the House, Harry Reid does not have that clout in the Senate, where the minority's power to delay is still intact. Nonetheless, I expect that, perhaps without any hearings or evaluations of the consequences of the action, Congress will approve the student loan move, albeit maybe later in the year (Secretary of Education Spellings told me yesterday that she does not see immediate action on this and other higher education initiatives).
A case can be made to provide more generous aid to incoming students, although frankly I think it is a very weak case. Almost no case can be made, however, to reduce the financial obligation already occurred by students. It is an outright income transfer from taxpayers to a special group, many of whom are relatively affluent. As I have said before, altering prices by legislative fiat is a recipe for disaster, or is at the very least poor public policy. It would be more efficient and less costly to simply drop money out of airplanes over some college campuses --junior colleges if you are a liberal Democrat, tony private schools like Princeton, Duke, Northwestern or Stanford if you are a Country Club Republican. There is little evidence that cheaper loans will do much to improve graduation rates, and even if there were, the costs almost certainly would be high relative to the benefits. As usual, however, Congress does not want to be troubled with facts, with evidence, etc.
It probably would be too much to ask President George Bush to veto anything. How a President who talks with such authority and toughness about Iraq wilts when it comes to confronting Congress is beyond me. But this would be a place where a veto is in order, assuming the Republicans in Congress are not part of a Parliament of Wimps.