Office and Plant:
Mailing Address:
2800 South 61st Court
P.O. Box 5137
Cicero, Illinois 60804-3091
Chicago, Illinois 60680-5137
(708) 735-8000
Facsimile:
(800) 323-2750
(708) 735-8100
September 26, 2007
College Student Loans - -
Another Black Eye for Private Enterprise
America’s manufacturers, like so many other of our industries, depend on access
to the pool of highly educated students completing their higher education. Our products,
the equipment we use, the people who run that equipment and the management of our
enterprises now require technical, engineering and organizational skills available only at
our colleges and universities.
These days, getting a higher education usually means being able to pay for it, and,
for most families, that is no small challenge. More and more, students must borrow what
they need to go to college. To a large extent, America has relied on private enterprise to
provide those loans.
We have written before in these letters about instances where our free market has
been compromised by counter-competitive practices or heedlessness to economic realities.
Some months ago, we described how State and local governments were enticing companies
to locate in their jurisdictions by offering generous tax and other financial subsidies. More
recently, we described how the subprime mortgage market had become a buccaneer’s
paradise based on illusory credit checks, inflated appraisals and the age-old hope that what
goes up will not come down.
Sadly, the scandalous behavior of certain universities and lenders in providing
academic loans to students and parents offers another example.
By way of background, the student loan business, which ran to $85 billion last year,
has a two-tier structure. The first is a system of government loans to students and/or their
parents. These loans have carried interest rates of 5% (for needy students), 6.8% (for other
students) and 8.5% (for parents o