In the grand scheme of things, student loans from the government are at least well intentioned. Perhaps they even encourage students who would not otherwise attend college to do so. However, with President Obama's latest expansion of the student loan program, we are again reminded whether he is unable to learn from history or is completely indifferent to the government waste incurred by student loan programs.
Obama announced last week a plan to ease the burden of student loans by only requiring graduates to pay a maximum of 10% of their income toward their monthly federal loan payments. However, as Rep. John Kline explained, "We simply can’t keep providing money from the federal government in the form of subsidized or actual loans and Pell Grants when we don’t have the money." Do you think easing student loan payments is just another way for Obama to ensure he still has the youth vote to back him in 2012? Let us know your thoughts in the comments.
...[T]he Obama administration initiated the process to transition toward the new student loan program some six months before the bill passed. Education Secretary Arne Duncan sent letters pressuring colleges and universities to prepare for the transition, even though many were reluctant and had chosen private lenders over the government option for a reason.
Fast-forward to the present and Obama, by executive fiat, is finessing a regulatory end run around Congress to allow student debtors to refinance and consolidate loans on more favorable terms, capping student loan repayment rates at 10 percent of the portion of a debtor's income that goes above the poverty line, and limiting the life of a loan to 20 years.
You don't need to be a math wizard to understand that this is just a slick way of forcing taxpayers to take a bigger hit by increasing the number of loans that will never be fully repaid, yet another redistribution of wealth from our Marxist in chief. Nor do you need to be a clinical psychologist to grasp that our government is teaching young adults how to be financially irresponsible with impunity.
Never worried about long-term consequences, Obama is either oblivious to (highly unlikely) or unconcerned with the likelihood that his actions will contribute to the expansion of a growing college debt bubble that economists warn could be analogous to the financial collapse-inducing housing bubble. Just as with the housing bubble, these unrealistically priced loans artificially increase the amount of money being spent on education, which will result in universities raising their prices. Research by Richard Vedder shows there is a direct correlation between increasing student "aid" and increased college tuition costs.
What do you think of the new student loan plan? Will it win Obama any 2012 votes?