Obama pushing for control of college loans

First it was banks, then car companies…healthcare takeover of 1/6th of our economy is a bribe away…the fishing industry is in Obama’s sights…..and NOW….a big push for making all college loans come from the government complete with debt forgiveness after 10 years.

Just last month, Obama announced in his State of the Union speech a plan for forgiving the debt on federal loan payments in a manner that will further increase government jobs and trash the private sector. From American Thinker:

 During his State of the Union speech, President Obama called for legislation that will ensure that payments on federal student loans are never more than ten percent of the borrower’s discretionary income. Moreover, the president reiterated a proposal made earlier in the week that would forgive student loan debt after ten years of public service and after twenty years for everyone else.

Basically, if you have a federal loan, it would be forgiven after 10 years of payments if you take a GOVERNMENT job, but forgiven after 20 years if you dare to enter the private job market. I believe, in some circumstances, federal loans are already relieved after 10 years if you take a public/government job.

AND now…Obama wants to require that ALL college loans must be federal loans and private lenders may no longer offer these loans as of July, 2010.

And, according to some Democratic leaders, this college federal loan play may just get added into the reconciliation process for healthcare! Yes, that would require only 51 votes for another HUGE government takeover from the private to the public sector….and without a Senate Committee vote or a hearing in the Senate. A similar loan takeover plan has already passed in the House.

This plan is an effort for government control of ALL funds loaned for college education. (As if the government has not already attempted control of so many other areas of our lives.) And, just imagine the job losses in the banking/loan industry. In 2008, private lenders loaned about four times the amount that government did. From CNSNews.com:

The measure would end the subsidized loan program under which private lenders made $56 billion in loans backed by the government to more than 6 million students last year, compared with $14 billion in direct loans from the government. Private lenders employ more than 30,000 people whose jobs depend on the subsidized loan program, and the industry says many would be laid off.

(I suppose some of those jobs could move to the public sector, therefore eroding more of the private job market in accordance with Obama’s wishes.)

Today, there are numerous individuals in the college education system who have loans (both public and private). I believe all of these loans require payments that begin only after finishing school. And there are different plans for repayment (ie 10 years, 25 years, income based, etc.)

Many supporters Democrats (and Obama) say that people should not be required to mortgage their future away in order to obtain a degree. But two things are wrong with this talking point.

First, the plan that Obama and Dems have proposed does nothing to reduce the exponential increase in college tuition. If lower costs for education is the focus, this plan doesn’t address it and, in fact, will make it worse when students get forgivable government loans.

Under an expanded debt forgiveness regime, there will be no incentive for universities to control costs (a potential boondoggle for professor and university administrative salaries), and thus tuition rate increases will likely continue to far outpace inflation. After all, what difference will it make if a student graduates with $20,000 or $1 million in student loans, particularly if the government will simply forgive any outstanding federal student loan balance after ten or twenty years?

Second, there are many who do literally mortgage their futures in an effort to get lower level and advanced degrees. Some who obtain loans rely solely upon those loans for their “income” or living above their current means, which truly does amount to mortgaging a future away. But Obama’s loan forgiveness plan is an incentive for that behavior. If a student can acquire a loan that is forgiven in ten years, some will borrow all they can even beyond reasonable student expenses because they can. And depending on the loan plan, up to 70% of that expense will be forgiven by the government.

Again, from AT:

Specifically, let us assume a graduating student with a government PLUS loan makes every monthly payment under a standard 25-year repayment schedule. Using the current interest rate available to consolidate a government PLUS loan (3.28%), nearly 70% of the beginning loan balance would be forgiven by Obama for working in the public sector.

At what point do we do away with this entitlement thinking? Since when do American taxpayers, including middle class taxpayers, owe it to others to pay for their college education? Whatever happened to factoring in responsible decision making, jobs, livable income responsiblity, and plans for individuals saving as a means to pursue your education?

The reality is that higher education is not a right and one must plan and work for his or her educational pursuits. Yes, loans are part of the plan, but they should be just that…. a loan…with requirements that it must be paid back in full!

And herein lies a big rub with all of Obama’s plans for higher education loans. Once the federal government has control of these loans, how long will it be before the federal government offers these loans to everyone that THEY believe should have them (kind of like the Fannie/Freddie home mortgage crisis)? Will they dictate what degrees you may pursue? What are the criteria for being eligible for a loan?

And, in the socialist mindset, odds are that the debt relief would not stop at a 10 year window. It likely would be changed over time to become full debt relief and an entitlement for everyone, or at least those that Obama/government deems worthy.

And don’t forget the strings that came attached to the government for those banks who received government bailouts last year in the banking meltdown. Do you think it will be any different for an individual who receives a loan from the government for their education?

This is another attempt by Obama and his revolutionary cohorts at controlling our lives and suppressing, if not removing, our individual liberty and freedom.

With each passing day, and each new attack on freedom from this administration, I am more determined to fight this onslaught with everything I’ve got. My kids, your kids and grandkids, and America’s future depend on it.


2 Responses

  1. Fantastic post! This is exactly what is happening. Honestly, I’m pretty terrified by all of this.

  2. I thought the topics you posted on were very interesting. Nice Blog and keep posting 🙂

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