Is the Federal government really considering ending their program os subsidizing undergraduate loans? Sorry, but it appears to be true, according to an article this morning in Inside Higher Ed.

The article makes it sound like this cut will save the Federal government $40 billion dollars over, what I assume to be, 10 years. (Isn’t that the window that the policy wonks are throwing around?) But, I ask, has anyone done the cost-benefit analysis on this change? Really, I want to know, and I’d like to see some references, Dear Reader.

Killing the subsidized loan program (even if it those funds are just moved over to need-based aid) will increase the real cost of education in America. This will decrease American economic competitiveness, which will decrease the long-term GDP. This type of analysis has been done. Take a look at Goldin and Katz’s The Race between Education and Technology. They show a correlation (and strongly suggest a causative relationship) between education of Americans and the country’s GDP.

If I hadn’t had access to subsidized student loans, I would not have been able to go to a private college. No big deal, I’m sure. But I probably would have have been able to go to graduate school to get a Ph.D. in mathematics. (Being able to defer loan payments on my student loans made graduate school an attractive option for me.) What is your loan story? How would a change like this affect your students? Your kids?