For students in California and other states facing serious budget deficits, this kind of hope has taken on a new meaning. At City College, Californians marched in protest against tuition increases, which have climbed to 30 percent (see Money Talks). What’s more, many universities and colleges throughout the country have had to reduce classes, effectively shutting out students from the courses they need to complete their degrees. The combination of tuition spikes and a sluggish job market is not a good one.

The federal government, which faces one of the biggest deficits it has ever seen, will soon become the primary distributor of student loans, thanks to the recent lending overhaul (see Program Notes). Scheduled to take effect this summer, the new law will put an end to the current program that subsidizes banks and other financial institutions for issuing loans. Students will be able to borrow directly from the government, which is expected to save billions over the next decade.

“By cutting out the middleman, we’ll save American taxpayers $68 billion in the coming years,” President Obama remarked at Northern Virginia Community College, where he signed the Health Care and Education Reconciliation Act of 2010. “That’s real money—real savings that we’ll reinvest to help improve the quality of higher education and make it more affordable.”

Not a silver bullet solution, but arguably a step in the right direction. The law will also put a cap on annual loan payments for college graduates, and increase the number of Pell Grants offered to low-income students.

But what about jobs and the private sector?

I welcome your comments.