Here is an idea to help the economy that won't cost the government a dime.....

Here at NWR, we spend a lot of time bashing the deep thoughts that the Democrats come up with to help the economy. For the most part, their ideas include raising taxes on some group of disfavored individuals - smokers, the wealthy, beer and wine drinkers.

We spend a lot of time shooting at the "fish in a barrel", I thought perhaps we at NWR should offer ideas to the Democrats that may actually accomplish something.

Let me make a suggestion to the Democrats in Congress that would help the economy, put money in people's pockets, and won't cost the government a dime.

There are a large group of individuals (of which I am one) who have a large amount of debt from their college educations. In some cases, that debt can equal or perhaps exceed the cost of a typical mortgage.

Generally speaking, those of us with this type of debt are well-educated, middle-class (perhaps upper middle class) individuals who are just trying to make ends meet. Why do I say that? Because wealthy people don't have to take out loans to go to school, and low income folks get help in the form of grants and scholarships. Those of us in the middle are forced to take out student loans.

I am by no means complaining, let me make that clear, about my loans.

When you finish your education, you have the opportunity to "consolidate" your student loans into one loan so you have one monthly payment, instead of several payments to several different lenders. I consolidated my loans as soon as I was out of school. By consolidating those loans, I locked myself into an interest rate for the life of the loans. At the time, for many of us, the rate wasn't half bad. Today, the rate is more than half bad.

The problem is that student loan borrowers can only consolidate their loans one time. There is no "reconsolidation" or "refinancing" allowed of student loans. Borrowers are not even given the opportunity to shop around to see if there is a lower rate available. It is a federal law that prevents this from happening.

If the feds changed the law, consider what would happen. First, it would allow these middle to upper-middle income earners the opportunity to refinance their loans and hopefully lower their monthly payments. This would indeed provide almost immediate relief to these income earners.

Making this change would, by definition, put more money in the pockets of these folks much the same way a tax cut does. The theory behind cutting taxes (and having people spend that money in the economy) necessarily would apply here - putting more money in people's pockets means more money into the economy.

It wouldn't cost the government a dime. Why? Because although many of these loans are guaranteed by the government, and a GSE (Sallie Mae) administers many loans, in the end the GSE is self-supporting, and does not rely upon federal dollars. All it would require is a change in the law.

Why would the lenders agree to this change? After all, by allowing borrowers to shop around for lower interest rates, doesn't that mean that lenders wouldn't be making as much money as they can make now? Yes.

But student loan lenders (like Sallie Mae and others) would be wise to learn from the Fannie Mae/Freddie Mac debacle. If student loan borrowers are suddenly unable to pay their loans, Sallie Mae might crumble alongside the rubble of Fannie Mae and Freddie Mac. Allowing student loan borrowers to refinance their loans so the borrowers can continue to make their monthly payments would mean less defaults for the lenders, and greater long-term stability for those lenders, as well.

Also, a recent decision by the 9th Circuit has created a way for student borrowers to avoid student debt through the bankruptcy courts. If the law doesn't change soon, don't be surprised if Student Lenders find themselves standing in line in the bankruptcy courts trying to recover whatever they can from student loan borrowers. Changing the law may have minimal short-term impacts, but will likely produce long-term benefits for student lenders and may be just what the doctor ordered in this economy.

The Congress and the Bush administration has been reluctant to change the student lending laws for some time now, and I do not understand why. But the Democrat Congress and President Bush, as they struggle to find ways to relieve economic pressures on Americans, would be wise to consider changing the laws governing student loans.

Although ultimately the change, in the grand scheme of things, may not have a substantial impact on the economy, every little bit helps. And if making this change will have only positive effects, without costing the taxpayers a dime, then why not do it?