The NYT has an interesting article that gives some background to payoffs by private lenders to get universities to opt out of participating in the government's direct student loan program. This would remove the government as a competitor in the student loan market. At one point the article asserts that in the area of student loans "the Bush administration [was] more sympathetic to the private market" than the Clinton administration. It's not clear that the private market is what is at issue here. After all, no one was suggesting that students would be forced to get loans from the government or that private lenders would be excluded from the market. The issue is simply whether the government would be competing against private lenders on a level playing field, in which students would be able to borrow directly from the government, if it offered a better loan package. Supporters of private markets might view it as positive to have another competitor in the market, even if it is the government. However, those concerned primarily about ensuring the profits of private corporations may take a different position.
--Dean Baker
