Legislation passed by the House on Thursday will make the federal government the sole provider of student loans and end private-lender involvment. According to President Obama,
This bill will end the billions upon billions of dollars in unwarranted subsidies that we hand out to banks and financial institutions, and will use that money to guarantee access to low-cost loans.
Unfortunately, lawmakers apparently don’t understand the concept of government subsidies causing higher prices. We see it in the corn industry, we saw it in the housing market, and we’re about to see it in the higher education industry. College tuitions are sure to soar with the government backing all student loans.
Source: Wall Street Journal