In a surprising and thought-provoking commentary, the argument is made for why the Treasury Department should take charge of federal student loans instead of the Department of Education. The author questions the logic behind the current arrangement, stating that the Department of Education is ill-equipped to handle loans and credit analysis, and that it represents a conflict of interest for the department.
The author suggests that if student loans were overseen by the Treasury Department, there would be a significant shift in how the federal student loan business is managed. Credit analysts would assess creditworthiness and manage financial risk, making decisions based on factors such as income, repayment plans, deferment, and forgiveness programs. This would introduce fiscal accountability into the system, which is currently lacking under the Department of Education.
Furthermore, credit analysts would also oversee risk management by evaluating the long-term sustainability of federal student loan programs. This would involve considering the earning potential and future productivity of students based on their chosen degree programs. If a program does not offer a market-based return on investment, the student would not receive the loan. This approach would ensure that students are directed towards degree programs that best fit their capabilities and have a financially responsible outcome.
The author highlights the current partisan nature of federal student loans, as well as the abuse of loan forgiveness programs. They argue that while federal student loans serve the objective of expanding access to higher education for low-income students, it has been widely abused. The White House’s plan to forgive up to $20,000 of borrowers’ balances, regardless of income, is criticized as unnecessary given the average loan balance of $37,088.
The article concludes by calling on Congress to rethink the federal student loan program and shift responsibility to a proper financial department like the Treasury Department. The author believes that this common-sense approach would help prevent partisan abuse and create a stronger American workforce. However, they acknowledge that significant changes to the program would require legislative action, which may take time to accomplish.
Overall, the article presents a compelling case for why the Treasury Department should take charge of federal student loans. It emphasizes the need for fiscal accountability, proper risk management, and a focus on guiding students towards financially responsible educational paths. By highlighting the flaws in the current system and calling for change, the author provokes readers to consider alternative approaches to federal student loans.
