Dakota Beacon

President Obama wants to nationalize the student loan program.  It is one of his long stated goals, of course just like with healthcare, he calls it "reform."

The bill # is H.R. 3221.

Congressman Pomeroy voted Yes on the bill.

The concept behind this "reform" is that banks "skim" upwards of $4 billion per year in profits from interest on student loans that are guaranteed by the Federal Government already.

Instead of subsidizing the banking industry, Obama and Pomeroy want to just take the program out of the administrative hands of the banks and run it directly though the government.

While this sounds like a logical idea, to get rid of the middleman, nowhere in the paperwork does it state how much it will cost to grow the Department of Education to do this - it is likely near or above the $4 billion a year saved by students.

It's always easy to say something will save money if one ignores half of the equation.

Enter Senator Conrad.

The Washington Times today issued an official editorial blasting Senator Conrad's efforts to exempt North Dakota from the nationalizing of the student loan program.

Why? 

Because we have the Bank of North Dakota: the only state-owned bank in the country. 

From the Washington Times: 

In the recent annals of senatorial vote-buying, there have been the Cornhusker Kickback and the Louisiana Purchase. Now make way for the Bismarck Earmark.

Sen. Kent Conrad, North Dakota Democrat, seems to be demanding a sop for the Bank of North Dakota to guarantee his support for President Obama's proposed federal takeover of the entire student-loan industry, known as the Student Aid and Fiscal Responsibility Act. The senator is willing to impose this awful idea on the rest of the country so long as North Dakota's own program is spared.

[...]

From a policy standpoint, the entire bill is a bad idea because it takes away consumer choice. By the standards of ethical government, the legislative sausage-making undertaken by Mr. Conrad and Mr. Harkin smells particularly rancid.

Quick History Lesson:

The Bank of North Dakota is a relic of North Dakota's Socialist-Republican days. 

In the 1920's, after the Socialist Party of North Dakota collapses, its most experienced and aggressive leaders created the Non-Partisan League, the NPL placed candidates in both the Democratic and Republican Parties in the early days, but it quickly became apparent that the way to implement their policies was to run their Socialists as Republicans. 

They did this from the early 1920's to the mid-1950's when the NPL switch to the Democratic Party.

During the NPL's control of the Republican Party, the State Bank as well as the State Mill and Elevator  were created.

Back to the Present:

The dirty little secret of Senator Conrad's efforts to exempt the North Dakota is that 1/3rd of the profits the Bank of North Dakota generates are from interest on student loans. 

Since the Bank of North Dakota profits immensely from the interest on student loans, Senator Conrad cannot claim that he is pursuing special treatment for North Dakota's students and graduates.

Does the student loan program need to be reformed? 

Absolutely. 

The Federal Government can start by reforming the application process (FAFSA), and discontinue the practice of counting parental income against the student when the parent is not paying for the student's school costs.

The Student Aid and Fiscal Responsibility Act does neither of these.

Senator Conrad's action to make North Dakota exempt does nothing but make the policy making activities Congress is perpetrating that much more illegitimate.

(For more reading, take a look at a recent article in the Bismarck Tribune called "Economy Prompts Fresh Look At North Dakota's Socialist Bank")