Why College is so Expensive these days.

If you’ve had to deal with the student-loan system recently, you know how bizarre it is.

The situation is pretty straightforward. When Clinton was elected in ‘92, the student-loan system was burdened by a layer of unnecessary bureaucracy. Higher-ed students would get a loan from a private lender, but the federal government would set the interest rate and guarantee the loan in the event of default. Clinton wanted to streamline the process and make it cost less — the government would make the loan, cut out the middleman, and save billions.

Conservatives and loan industry went nuts, forcing Clinton to backtrack. The eventual compromise led to two types of student loans — direct loans and guaranteed loans. Colleges were allowed to choose the system they preferred.

They went with direct loans to save money, right? Initially, yes, but after a few years, colleges started going back to guaranteed loans, even though it included more bureaucracy and seemed to cost more. Conservative activists, lawmakers, and think tanks were thrilled. Competition led people away from government and towards private entities! Hooray!

Or not. Lenders were bribing college-loan administrators.

Today, Michael Kinsley asks the question that has gone largely overlooked in political circles: why would Republicans protect a private system that the government can manage at half the cost? Why would the GOP adopt the student-load industry “in its infancy, like a stray cat, and have nurtured it ever since”?
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