Sick Transit

A retrospectively obvious solution to the student loan scandal:

The right to originate loans guaranteed against default by taxpayers is something of great value that the government currently gives away for free to the banking industry. Why shouldn’t banks have to bid against one another to secure this sure source of profit, especially when it’s the taxpayers who create this “business opportunity”? Banks could compete by offering the highest bid for the right to sell guaranteed student loans to designated schools or by agreeing to accept the lowest amount of subsidy.

How much revenue would such an auction raise? It’s hard to say exactly in the absence of a market. But recently, one of the country’s largest lenders, the Missouri Higher Education Loan Authority, sold off half its portfolio of student loans at a premium of 7.1 percent. This hints at the market value of government-guaranteed student loans and suggests that taxpayers could save $15 billion to $20 billion over the next five years if Washington relied on market mechanisms instead of backroom politics to establish subsidy rates.

This is not made up. The pic is extracted from this PDF; we saw the logo at bus stops all over the county today.