Tuesday, March 30, 2010

Student Loans and the IRS

We tax all the others and pass the revenue on to you

There's nothing complicated about student loans.  You already knew that, didn't you?  If you want to go to college or any number of other schools you can save, borrow, get a scholarship or subsidy or go to work to pay the institution that grants you admission.  Simple.

The health care bill eliminated banks from the student lending industry and the costs and fees they charged student borrowers.  The gummint is taking over the industry, changing some of the repayment rules (to its own detriment, one should note, but that could change) and keeping the profits to pay the costs of its health care legislation.  If there are any, that is, after the gummint eschews those fees and charges.

Think about it.  The gummint decided to take over a (gummint-funded) private industry, renounced certain of its profit centers and intends for any remaining profits to be used to pay for its health care bill.

This requires a profound suspension of disbelief: 
  • First, that the gummint should supplant any private industry in a non-national security field. 

  • Second, that the gummint can run the industry better than the people who were already running it at a profit that could be taxed, keeping in mind that the parts that generated profits no longer exist.

  • Third, that it is in the best interest of the American citizenry that gummint should compete in the private sector.

  • Fourth, that the gummint won't use its lending authority to control which students will be allowed to go to which schools.

What vital national programs has the gummint run well and within budget?  Medicare, Social Security, Fannie Mae, Freddie Mac, Chrysler?  Well, no.  Then why should we accept that they can run student lending (or health care or anything else) better than the people who are already running it?

When someone neglects to repay a student loan, who's going to collect the unpaid debt?  The Health Care Bill, of which the Education Bill is a part, already provides for the IRS to enforce its provisions and it allows the disclosure of previously confidential tax information to health care administrators.

May I suggest that the IRS might be well-suited and amply staffed, with its new enforcement employees, to collect delinquent student loans?  There are precedents.  The collection of delinquent child support payments is just one.  (Oh, you didn't know about that one?)

The problem is that the IRS is very often incompetent and chronically bumbling.  There were very good reasons that Congress devoted much of 1998 to investigating its massive internal failures and incompetencies.  

Recently the Sacramento IRS office sent two employees to visit a local car wash because of unpaid tax of two cents (yes, $0.02) and accrued penalties and interest of a couple hundred bucks.  These are the folks you want to enforce health care premiums and collect student loans?

Or have you heard differently?

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Quis custodiet ipso custodes.

1 comment:

  1. You've come into your own. I read somewhere it takes an average person about 10 years to start to feel confident about a new undertaking. It seems to me you're right there. I was challenged by everything you said here and I'm gratified you've continued to do it - we're all better for it.