A Trillion Dollar Bribe

Obama’s numbers are in freefall – against generic and real Republicans.

Worse – for him?  He’s falling in the demographics that put him in office.  Even students.

Which must have something to do with his ride to the rescue of all those student loan holders:

In keeping with his new campaign theme of “we can’t wait,” President Obama today will roll out a plan to put more money in the pockets of some of the nation’s 36 million student loan recipients.

Obama has broad latitude in this area – certainly broader than the first two parts of his western campaign trip, underwater mortgages and subsidies for hiring veterans – because one of his early legislative initiatives was to have the federal government take over the student lending business in America.

Students are apparently now “too big to fail”.

Obama argued for the measure in 2009 as a cost-savings initiative, saying that the old system of privately issued, government secured loans reduced the amount of available money for needy students and also prevented the feds from making the system more efficient.

And we all know nobody makes systems efficient like the feds.

Here’s the part that should give you pause (emphasis added)

But Obama is now seeking to use that new power to obtain a taxpayer-financed stimulus that Congress won’t approve. The idea is to cap student loan repayment rates at 10 percent of a debtor’s income that goes above the poverty line, and then limiting the life of a loan to 20 years.

And you know what that means?  Money thrown away:

Take this example: If Suzy Creamcheese gets into George Washington University and borrows from the government the requisite $212,000 to obtain an undergraduate degree, her repayment schedule will be based on what she earns. If Suzy opts to heed the president’s call for public service, and takes a job as a city social worker earning $25,000, her payments would be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total exposure.

Twenty years at that rate would have taxpayers recoup only $28,220 of their $212,000 loan to Suzy.

The president will also allow student debtors to refinance and consolidate loans on more favorable terms, further decreasing the payoff for taxpayers.

Too bad the founding fathers said nothing about spending without representation…

8 thoughts on “A Trillion Dollar Bribe

  1. Is this a surprise? The man worked for a university. He is about as disinterested as Michael Moore at a Sunday Brunch buffet.

  2. Three points:
    -The CBO’s projections have a ten year horizon. This allows Obama to say that his initiative doesn’t cost the taxpayers anything.
    -Why %10? Why not 15%, or 5%, or 0%?
    -Once again Obama has shown that he knows nothing about economics. He is truly an idiot.

  3. Remember: subsidies for oil companies who produce the fuel that powers the transportation system and electrical grid of the nation is bad. Subsidies that enable young people to get degrees in disciplines nobody needs are good!

  4. Our dominant media culture, so obsessed with fairness and not showing any favoritism, won’t report on how this enriches a major contributor to Obama and the Democrats, the university community.
    At a time when oil company exec’s get hauled before Congress to explain their ‘obscene’ profits (which by the way, on a percent of sales basis are much lower than many beloved companies like Apple) yet we never see university presidents be compelled to explain the runaway tuition cost, the students that are encouraged by their advisors to continue study in a certain field (and add to their already large student debt burden) even though there are few open positions in that profession and funding for ambitious building programs when distance learning should be the way to get educated. Industry is crying out for people trained in the skilled trades, but the universities keep graduating baristas and bartenders with masters degrees in something other than making a latte or a sex on the beach.

  5. Obama’s action distorts the education marketplace in a number of ways. This is on top of the distortions that have been introduced over the last seven decades or so.
    I’ve taken classes at a community college. The first two years are the equivalent of high school classes in the 70’s.
    This is the way the world of higher education works: if you are seeking a post-BA degree in one of the STEM disciplines, and you are not granted a fellowship, it is the establishment in those disciplines way of telling you that you might want to pursue other objectives. You can’t cut the mustard.
    Columbia School of Journalism charges about $80k for an MFA. Why do people pay for this? It’s stupid. Go to law school instead. Writing is mechanics. If you go to law school, and you can pass the bar, you will at least have a fall back career, and you will learn to write. Fer’ Gawd’s sake, Shakespeare didn’t have an MFA.

  6. Terry;

    I also attended the University of Bloomington, aka Normandale in the late 70’s after I got out of the AF and felt the same way – these classes are just like my senior year. I attributed my surprisingly good performance to that factor.

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