OTHER OPINION: Student loans

As college admissions are being finalized, thousands of high school seniors are deciding where they will enroll - and soon it will be time for their families to worry about how to pay for those educations. Often, that means loans.

Young students are risky borrowers: They have little or no income and no collateral, and they often need lots of money for tuition, room and board. But it is essential that every qualified student be able to pay for an education. So, since 1965, government subsidies have all but guaranteed profits to private lenders that issue higher-education loans that carry single-digit interest rates and terms that students wouldn't find in the private market. Long controversial, that system broke down last year when private lenders couldn't raise money during the credit crunch. The feds had to swoop in with emergency financing.

President Obama's budget, released Thursday, would eliminate the subsidies to private lenders. The subsidy scheme is too expensive, many experts claim - much more so than a parallel program under which the Education Department uses Treasury funds to lend money to students directly. The Office of Management and Budget estimates that the government could save $41 billion over 10 years by putting all federal student lending under the government's Direct Loan Program. The Congressional Budget Office says that savings would be more like $94 billion. Obama wants to put those savings toward increasing and then guaranteeing Pell Grants for low-income students.

Congress could adopt Obama's sensible plan to reduce these subsidies without buying into his desire to essentially turn Pell Grants into an entitlement program. The president can't count on all of his projected savings to materialize. Even if he could, Congress should maintain the flexibility to adjust the Pell Grant program's funding as budgets demand.

- Washington Post