Submitted by Craigie (not verified) on July 28, 2009 - 7:35am.
It is a completely obvious statement that the lawyer-legislators of the Congress simply do not have the skills to set a payment rate to loan holders that is neither too high nor too low, or that encourages the optimal number of lenders to make loans to all students. Greenspan, Volcker and their top analysts did not have those level of skills, so how would amateurs in Congress be able to do it? It is obvious that the subsidy level, for example, set in 1998 (T-bil) or 1999 (CP), was based on lobbying rather than analysis. The members of Congress didn't even wait for the completed analysis which they specifically had requested to hold off to do their things and pump up the subsidies.
Bott is way off and shows his inherent dislike for competition and the whole idea of introducing market forces into federal student lending. The lending industry has had 15 years to get on board with market mechanisms (whether auctions or some other type of bidding process). DL is the only other option. Continuing with 1986 FFELP is NOT an option and never was. At least the market forces in DL (inter-agency borrowing interest rate and discount rate) are not subject to program-specific lobbying. (Someone could certainly suggest that the rates that federal agencies pay Treasury are too high overall, but this would not be student-loan-specific.)
NAF is right on target this time
It is a completely obvious statement that the lawyer-legislators of the Congress simply do not have the skills to set a payment rate to loan holders that is neither too high nor too low, or that encourages the optimal number of lenders to make loans to all students. Greenspan, Volcker and their top analysts did not have those level of skills, so how would amateurs in Congress be able to do it? It is obvious that the subsidy level, for example, set in 1998 (T-bil) or 1999 (CP), was based on lobbying rather than analysis. The members of Congress didn't even wait for the completed analysis which they specifically had requested to hold off to do their things and pump up the subsidies.
Bott is way off and shows his inherent dislike for competition and the whole idea of introducing market forces into federal student lending. The lending industry has had 15 years to get on board with market mechanisms (whether auctions or some other type of bidding process). DL is the only other option. Continuing with 1986 FFELP is NOT an option and never was. At least the market forces in DL (inter-agency borrowing interest rate and discount rate) are not subject to program-specific lobbying. (Someone could certainly suggest that the rates that federal agencies pay Treasury are too high overall, but this would not be student-loan-specific.)