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Subject:  Re: Direct is a payback--you live off the Northe Date:  7/29/2001  7:22 PM
Author:  W505a Number:  524 of 4854

Here, check this out.

What Iowa (sorry, Tennesee, I'll lay off TVA) Congressman Nussle decided to do a few months back is ask the Department of Education if the Direct Loan program is paying for itself. It appears that a couple of years back, Direct did a study, and it found that the program was going to take in wayyy much more than it had to pay Treasury back for what Direct borrowed to make loans. (You recall that loan providers borrow the money they lend to you from other people. Those "other people" want a rate of return on their investment, so the interest rate you pay must be higher than the interest rate the servicer has to pay to all the investing "other people" out there. This is how Sallie makes money.)

Apparently, out in farm country, they don't have anything better to do while they're watching the corn grow and waiting (oh yes) for the big fat farm subsidy check to come rolling in from Washington (using the Northeast's money to fund it). So they decide to have a second look at programs that primarily benefit the Northeast. (Since Iowa has land-grant colleges that the Northeast paid for back in the 1860's. In fact, I think the whole state of Iowa was paid for back East, in something called the Louisiana Purchase.)

It turns out that Direct Loans may in fact not be the money-maker once thought (could it be because they are now giving out reconsolidations at 5% and they have to fund them with long-term government borrowing at 5.8%?) So that means that someone in New Jersey who pays $10,000 a year in income taxes might be getting a small deal from Uncle Sammy, that apparently is a big issue to an Iowan.

So I go to my Harvard University Taubman report, and guess what? Iowa turns out to be one of these states where the more federal money comes in than goes out! THey get $1.15 for every $1 that's paid to Washington.

And so I'm thinking, you know what we need for Iowa? Instead of sending all that money over there from New Jersey, what we need is a nice federal loan program (and I understand they already have a number of easy-terms ones for the Iowa farmers.) This one would be called the "Direct, Technology-Done-Put-Me-Out-of-a-Job, Assistance Program". It would be for families who can't make ends meet because they stuck to small family farming like it was still 1890, when signs all around showed that agribusiness was taking over and that they in fact didn't really have marketable skills, but were instead pretending like what they did for a living was still useful, because it had been done that way for centuries.

This program would let the eligible ex-farmer borrow up to $2000 a year, at 8.25%, to help make ends meet. This is of course a loan and must be paid back. This would be in place of the Earned Income Credit, Child Credit, and all the other grant money handouts that, let's admit it, are just a bunch of welfare anyway, right?
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