This is the Cato Daily Podcast for Tuesday, July 17th, 2007.

I'm Caleb Brown.

The U.S. House has passed measures cutting billions of dollars in subsidies to student lenders. The House would prefer those funds

go to beef up other education subsidy programs, all under the guise of making college more affordable.

So what is the likely impact on the cost of college tuition?

Neil McCluskey, a policy analyst for the Cato Institute's Center on Educational Freedom

response. Are there any particular benefits or problems associated with shifting subsidies

from lenders to students? Well first of all it's good that they've cut subsidies to lenders.

You know, any time that there's less taxpayer money going to somebody against taxpayers'

will is good. The problem is that they've taken that money and directed it all towards students,

not only towards students, but they've skewed it largely to student loans, which disproportionately help middle income and even upper income kids.

And so what that's going to do is continue to drive tuition levels up.

Because basically, as long as the government enables people to pay higher tuition,

the schools are going to charge it because schools like everybody else wants to get as much

money as they can. So this law is not going to do anything to really make college more

affordable. Like they said, it's not going to help taxpayers who won't get any of the

money back, but it will help politicians who will be able to say to lots of middle-class voters,

look I helped you out by giving you more government aid.

There is a plan on Capitol Hill floating around that would dramatically increase the maximum Pell Grant, which predominantly

is supposed to support middle income and lower income college students.

Well the Senate has a version of this bill, not the same name, but it's

student aid oriented that would do more to focus money on Pell Grants. But the

...