Leaving aside the fact that federal meddling with student loan interest rates has done nothing to make college affordable, here’s another reason to get government out of the schooling and banking enterprises: they cut themselves the best deals and leave taxpayers with the bill.
A review of congressional spending records by USA Today and the non-profit Sunlight Foundation, a watchdog group, showed that the House of Representatives spent almost $15 million last year to pay down staffers' student loans, while the Senate spent almost $6 million. Members of Congress are not eligible for the program.
Federal agencies — which provide more detailed information — spent about $72 million in 2011, the last year for which data are available, to pay down student loans for 10,134 federal workers. …
Participation in the program and its costs grew rapidly between 2002 and 2010, statistics kept by the Office of Personnel Management show. In 2002, 690 employees received the loan payments at a total cost of a little over $3 million. By 2010, more than 11,000 workers in 36 federal agencies had received loan payments totaling $85.7 million. That number dropped to $71.8 million in 2011.
A better form of generosity would be funding students directly so institutions would have to compete to attract them and their education dollars. That change alone would put powerful pressure on postsecondary institutions to keep costs down, reduce administration, and ensure students graduate on time.