From the Delay

Nationalize the Banks
Capitalism hurts 'U' Students

Every year, thousands of U-M students pay for part of their tuition with student loans. Allegedly “subsidized” by the government, these loans still charge people an outrageous 7.69% to repay — in a year with only 1% inflation. Banks know they can charge these high rates because the exploited students have nowhere else to go. Without the loans, many bright students would be unable to afford their education. A solution must be reached to this problem, and one is readily apparent. If the government made these loans, they would charge next to nothing, because the government doesn’t have the greedy profit motive of private banks. Thus, one option would simply be to expand the government’s direct loan program.

However, this would ignore the fat profit margins banks also collect from non-students. Despite paying miniscule rates of interest to their depositors, banks routinely charge young couples 8-10% interest to finance the purchase of a house. Also, banks routinely engage in “racial profiling” and refuse to loan money in depressed, mostly minority, economic communities.

Therefore, when acting to solve students’ problems, President Clinton should also consider the other people exploited by financial institutions. In reality, there is only one comprehensive solution: nationalize the banks. If the government owned the banks, they could lend people money on the basis of need, not the ability to pay it back. They could use capital to promote social goods, such as protection of the environment and minority economic development. They could also lend people unlimited amounts of money, since they could always print more. In short, they could take from each according to their ability, and give to each according to their need.

This article was published in the 1 April 1999 edition of the Michigan Delay.