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Will Government Actions on Student Loans Backfire?

The Higher Ed Watch blog warns today that Federal measures to deal with the “student loan crisis” (I put the term in quotes because their article reports that there is no crisis) might ultimately make things worse for borrowers:

We are particularly concerned that some policymakers, in giving in to the scare tactics employed by the student loan industry, may in fact be positioning student lenders, as well as high-priced colleges, to game the system to their advantage.

The writers take issue with several recent actions and rumors of action.  Among them, they note that the government’s recent announcement that it will buy up more private student loans may be premature and point out that “there is no guarantee that lenders will use the help they get to make new loans.”  They are also concerned with the proposal to increase loan limits:

To create more paths for students to go into further debt from which they have no way to get out from under is irresponsible and in most cases, unnecessary.

I couldn’t agree more.

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