The Scrapbook was not a huge fan of the federally subsidized student loan system that got replaced by the Obama administration and the Democratic Congress along with their takeover of the health care system earlier this year.

Under the system in place since the mid-1960s, private lenders competed for the right to originate and service the loans; interest rates were subsidized and fixed by law; and the government stepped in to make up the losses when Joey and Phoebe Graduate failed to earn enough with their Therapeutic Dance degrees to make their loan payments down the road. The banks were guaranteed a profit, but not too much of one. If their borrowing costs fell far enough, they had to kick back some of their earnings to the feds.

All in all, it was a very unlovely system, the most noxious kind of big government/big business corporatism​—and one that came with a toxic side-effect. Just as cheap, subsidized mortgages led to a price bubble in the housing market, subsidized student loans had the effect of inflating the price of higher education (one of the last, great unpopped bubbles in our economy, by the way). University administrators could raise tuition and room and board with impunity, secure in the knowledge that the government would be subsidizing their customers. 

H. L. Mencken defined Puritanism (unfairly but memorably) as “the haunting fear that someone, somewhere, may be happy.” Obama Democrats are afflicted with Money Puritanism: the haunting fear that someone, somewhere, may be making a profit. In the case of their student loan “reform,” that someone was the private lenders, who are henceforth to be replaced by the Department of Education, which will now make the loans directly to borrowers. By eliminating the profits of the middle man, the idea was, federal funds could be freed up for more subsidies to the students—i.e., to the colleges and universities (more inflation!). What could possibly go wrong?

Well, a year ago, owing to its deep paternal devotion to Scrapbook Jr., The Scrapbook applied for financial aid at a fine public university, and in the process procured a small student loan from a private lender. The worst part of that process by far? Filling out online a form known as FAFSA, aka the Free Application for Federal Student Aid. And who is the bureaucratic progenitor of the FAFSA? Why, none other than the U.S. Department of Education, the new monopoly provider of federal student loans. (Never trust a federal program with the word “free” in its title: Navigating that FAFSA website cost The Scrapbook many hours that we will never get back.) So, the new Obama student loan system will be brought to you by the same folks who run the FAFSA. Wonderful.

Given all of this, we were unsurprised to receive an informational email last week from the associate provost for enrollment at Scrapbook Jr.’s university, warning of a few possible headaches from the new system:


Dear Student,  As a result of the passage of the Health Care and Education Reconciliation Act of 2010, we must implement the federal government’s Direct Loan Program beginning with summer session 2010. .  .  . You may have questions or concerns about the changes and what this will mean for you as a borrower. Please review the attached Direct Loan Frequently Asked Questions for some answers to commonly asked questions about Direct Loans.  What does this change mean for you? 

We’ll give you a hint: more FAFSA-style pain. Here are a few of the highlights: 


♦ You will no longer select a lender or bank for federal student loans as you have in the past; the lender will now be the federal government 

 ♦ Returning borrowers MUST sign a new Master Promissory Note (MPN) through Direct Loans for each loan type that they wish to borrow 

 ♦ Parents wishing to borrow a PLUS loan will need to seek credit approval and sign a new Promissory Note for the PLUS loan through the Direct Loan program 

 ♦ Returning Stafford, PLUS and Grad PLUS borrowers will have loans through the FFEL (Federal Family Education Loan) and Direct Loan programs. This will likely result in different servicers in repayment. Please become familiar with accessing your record in the National Student Loan Data System (NSLDS) at prior to entering repayment so that you are aware of where to make your payments. 

 ♦ Moving to the Direct Loan program changes the timing of when your loan funds are released and when we can provide refunds for those students who use loan funds for living expenses off campus, books, meals, etc. Unlike in the past, refunds will not be available until about a week after classes begin. Please plan accordingly to arrive on campus with enough money to cover your living expenses until you receive your refund [emphasis in the original].

Like we said, what could possibly go wrong? Cash flow problems for students, paperwork nightmares for parents—all in a day’s work for the Obama Democrats. The upside: The pain will be felt most acutely this August and September, and with any luck will persist until the Education Department’s new clients can do something about it in November. ♦



The Scrapbook applauds President Obama and Defense Secretary Robert Gates for the selection of Marine General James Mattis to head Central Command. Victor Davis Hanson writes that “Mattis is a proven battlefield commander, a sophisticated student of history, and unshakable in his nerve and purpose.” Hanson adds, “We now have, with General Petraeus as ground commander, our two most gifted senior combat generals in charge of Afghanistan, who have worked well together and who were brilliant in Iraq in its darkest hours. I think all this is somewhat analogous to the final rise of Grant and Sherman in spring 1864 .  .  . or Ridgway in the last days of 1950, or the arrival of Abrams in Vietnam in latter 1968 .  .  . and increases our chances for success.”

Mattis is extraordinarily well-read and well-spoken, but he’s also willing to be direct and blunt on occasion. The Scrapbook has enjoyed some of the Mattisisms that have been circulating since the announcement of his pick, and thought you would too:

♦ Speaking to tribal leaders in Iraq: “I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you f— with me, I’ll kill you all.”

♦ Convincing an Iraqi that the United States wouldn’t cut and run: “I said I am never going to leave. I told him I had found a little piece of property down on the Euphrates River and I was going to have a retirement home built there. I did that because I wanted to disabuse him of any sense that he could wait me out.”

♦ Advice to soldiers and Marines: “Be polite, be professional, but have a plan to kill everybody you meet.” Also: “If I were to sum up what I’ve learned in 35 years of service, it’s improvise, improvise, improvise.” And: “You are part of the world’s most feared and trusted force. Engage your brain before you engage your weapon.” Similarly: “An untrained or uneducated Marine .  .  . deployed to the combat zone is a bigger threat to mission accomplishment .  .  . than the enemy.”

♦ Psychological counseling: “The first time you blow someone away is not an insignificant event.”

And last but not least: “Marines don’t know how to spell the word -defeat.” ♦



Barack Obama is fond of the Nobel Prize winner in his cabinet, Energy Secretary Steven Chu—never missing an opportunity to salute his fellow Nobelist—but THE SCRAPBOOK has always preferred Chu’s (we dare say) savvier and more competent predecessor, Spencer Abraham. Abraham served in that august position during the first term of George W. Bush—and was, the jacket of his new book informs us, “America’s longest-serving secretary of energy.” Who knew?

In any case, just in time for congressional debate over energy legislation, Abraham has produced a useful and readable (and affordable!) book on energy policy that The Scrapbook is pleased to recommend: Lights Out: Ten Myths about (and Real Solutions to) America’s Energy Crisis. Abraham, writing with William Tucker, lays out clearly and accessibly how to think—and how not to think—about all the issues surrounding energy policy. Jacques Nasser, the former head of Ford Motor Company, says the book is “an interesting mix of folksy story-telling, technical analysis, and political intrigue.”

The Scrapbook sped through it in one evening, in a well-lit room, TV on in the background, air conditioner going full tilt, popcorn popper popping—and felt better about our energy future. ♦


Sentences We Didn’t Finish

"Morning Miracle is a love story, a tale of passion starring a faded beauty trying desperately to hang on in a rapidly changing world. The object of author Dave Kindred’s ardor is old-school newspaper journalism, deeply reported public affairs coverage, the kind that can make a difference in people’s lives. ‘I love the smell of newsprint in the morning, and my favorite time of day is thirty minutes to deadline,’ writes Kindred, who has spent more than five decades in the business. In particular, Kindred loves the journalism at the Washington Post, where .  .  . ” (Rem Rieder, Washington Post, July 6). ♦

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