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  • Obama's Upcoming Student Loan Announcement

    On Wednesday, President Obama is expected to make an announcement regarding student loan debt. He is expected to propose relief for students struggling to make student loan payments.

    While it’s unclear what exactly President Obama will propose, economist Richard Vedder calls the idea of student loan forgiveness “the second-worst idea ever—the worst was the creation of federally subsidized student loans in the first place.”

    And he’s right: It is unfair to forgive student loans on the backs of waitresses and construction workers and the nearly three-quarters of Americans who didn’t graduate college. Increases in federal subsidies or student loan bailouts shift the burden of paying for college from the student—the person directly benefiting from college—to the millions of Americans who did not graduate from college.

    Moreover, increases in federal subsidies over the decades have not reduced college costs. Even though federal subsidies like Pell grants have increased 475 percent, the cost of attending college has increased 439 percent since 1982—faster than the rate of health care increases.

    Increases in federal subsidies give students increased purchasing power, which incentivizes colleges to raise tuition, in turn leading students scrambling for more student loans. It’s a vicious cycle that does nothing to mitigate the cost of attending college.

    Instead of increasing federal subsidies or forgiving student loans, reforms like limiting the number of years a student is eligible for federal subsidies—or even encouraging state universities to put more course content online—would go a long way in popping the higher ed “bubble.”

    Posted in Education [slideshow_deploy]

    32 Responses to Obama's Upcoming Student Loan Announcement

    1. Alozarkman says:

      I am sure that one of the boxes to check will be race….illegal alien….etc. Automatic forgiveness for all the ones that mark it…2012 will be a good year for moving companies from D.C. to Chicago.

    2. Jared says:

      So by that logic I should not have to pay taxes for public education because I do not have children. I should also not be paying taxes for medicare or medicaid since I use neither. We've put the "Big Bank" bailouts on the backs of waitresses and that caused no growth only disdain. I say it's time we try the trickle up plan. The trickle down did nothing.

      • mike says:

        I think the major point is that the federal subsidies for student loans was a bad idea to begin with, and forgiveness of the loans is akin to the bank bailouts. In either case, all tax payers bear the brunt of these programs and subsidies that do very little if anything, to reach the desired goal.

      • Allie says:

        I received a full scholarship to a small state college and chose to go there instead of a prestigious private university that gave me virtually no scholarship or financial aid. It was a really difficult decision. I was so proud that I got into high-ranking school and I loved the school but I weighed the pros and cons and ultimately decided that since I would need to further my career (either a masters or doctorate) it didn't make sense to pay such a hefty price for an undergrad degree. However, many of my friends chose to go to better schools and are now burdened with large amounts of debt. I wish there was a course you could take in high school that would discuss the weight of a degree and help prospective college students make educated decisions about their future and the best college for them. There used to be the idea that a degree from a prestigious university was worth the hefty price tag but I just don't think it's true anymore. I know someone who graduated from Upenn with a communications degree and is a struggling to find work.

    3. iplay5 says:

      My wife and I consolidated our student loans 15 years ago, $35k. Including times of deferment, we have been paying on this loan ever since and our balance has doubled!!!! I know it’s about the compounding interest, but – really? New student loans can be had for 3% and 4%, while we are being charged 8.25%, nice!! The interest is something that has been added on, little to do with the original amount borrowed. Relief would great if the interest could be fairly reduced out of our balance. Oh wait, that makes sense. I don’t know if it will happen…

    4. Gotostatecollege says:

      I'd settle for a competitive interest rate on Federal Loans that are currently in repayment. The rules on the books only let you consolidate once which is absurd. Borrowers should be able to refinance these loans just like a Mortgage. After all they are better investments for banks than mortgages because you can't get rid of them in bankruptcy and you can't walk away and foreclose on them like so many people do with their homes these days. I'm not looking for a bailout, i'm just looking for fair loan terms.

      • money to spend says:

        You are spot on my friend. Were not looking for a bailout, just a lower interest rate. Is everyone aware that the Govt is charging 7-8% interest on student loans? I'll say this again, Is everyone aware that the Govt is charging 7-8% interest on student loans? this rate should be no higher than 5%. Reducing the interest rate puts more money into the economy. Simple math, what did I miss?

    5. Joseph Blowa says:

      Mr. Obama –

      Please do not make me accountable for the expansion of another poorly run government entitlementthat is, by definition, clouded with fraud and waste.

      I am a beleaguered tax payer trying to support my family and simply cannot afford the expansion on another broken P O S federal program.

      Why don't you get it? I am broke and cannot afford any more of yout ineffective vote buying.

      • rodney says:

        look students need help, it doesnt make sense to graduate from grad school with 180k in debt at 6.9% thats 2k a month in pure interest plus you cant find a job and even if u could, how the hell can u live off of 3k a month anyway its crazynesssssss. The government needs to forgive all student loan debts or else people will no longer go to college or grad school. hell i should have been a bus driver instead of getting a PHD

    6. Samantha says:

      It's unfair to shove the cost of the bank bailout on working people. The bailout shifted the burden of paying for the financial crisis from the people who are guilty of creating it to the millions of Americans who have been taken advantage of by and struggle to pay those banks in the first place.

      The banks are not creating jobs.
      The young people with education are the one who will be the innovators, the entrepreneurs and the job creators.
      But buried under debt, many will not get the chance.
      And I agree that college COSTS are to blame. I hope this plan has something to do with reducing COST in the first place. But when the government budget funds PRISONS, among other things, while cutting education, yet won't put a single corporate criminal in jail, what is to be done?

      We, the students, need help.
      And investing in education is the most important thing America can do for long term economic stability.

      Also, my university is looking to create online courses, but let me tell you –when your school takes out a 6.9 million dollar loan to fund an online program, but you can't even find a place to sit and study because they shut down over half the campus libraries the previous quarter…

    7. Justin says:

      Regardless, student loan repayment needs reform. Interest Accrues DAILY, that's right, Daily, making it cost a lot more. I have roughly $38,000 in student loan debt and a $400 payment for 20 years. That means it costs me roughly $96,000 to payback $38,000. $96,000 will buy a decent house in some parts of the country, with a payment as long.

    8. Grumpyelder says:

      Better idea Jared,

      Why not put it on the backs of the collages and universities who have been price gouging students for decades.. Once again government interference in the market screwed things up. Subsidies and loan guaranties created the perfect opportunity for "evil capitalist colleges" to rob students and they did.

    9. NO MORE OBAMA says:

      Great, first we made student loans a part of the national debt; now we are going to write off parts of this debt. So now the tax payers get to make up for all of this! How is your "Hope and Change" doing now Obama fans!!!!!!

    10. ElEl says:

      "Increases in federal subsidies or student loan bailouts shift the burden of paying for college from the student—the person directly benefiting from college—to the millions of Americans who did not graduate from college."

      That is part of the problem. The college graduates aren't benefiting from having an education. If they can even find a job, they are doing the same work as your "waitresses and construction workers and the nearly three-quarters of Americans who didn’t graduate college."

      It hasn't only been law schools that have inflated job and pay statistics. I don't think taxpayers should have to bear the burden of unpaid student loans, either, but I do believe that the elements of fraud (a representation of a material existing fact; falsity of representation; scienter, reasonable reliance; and damages) are present when you look at the representations made by the schools to perspective students.

    11. Kaitlyn says:

      I wish I could like Jared's comment twice.

    12. Peres Triana says:

      Higher education should be free for those good students that cannot afford it and have the discipline to work hard to improve this country. Education to those that deserve it is an investment. To invest in wars is destruction and waste.

    13. Bobbie says:

      college is not a right but the acts of the president are conditioning the minds to understand college will be a requirement to work, no matter the job. Please put an end to his deranged influences. He's trapping minds to confine them under trained rule with his invitation to free "to burden your costs on someone else," college.

      In many aspects of many colleges, the higher education is mere extension of indoctrination in social engineering using public and "some targeted to provide" private funding. Some targeted to pay over twice as much! how is that fair? For those that want the privilege of a college education free from the outside influence of government would want to be the ones who foot the bill.

      College tuition shouldn't ever go up to accommodate wages and benefits of any of the staff. Those things increase when the facility is successful. WITHOUT GOVERNMENT!

      Keep responsibilities (achievements and costs) where they belong and all accountabilities the same.

      College should not be required or mandated by the government as this shows a dangerously suspicious government tendency in today's ugly world of dishonest words and illusions. People have intuition and use it that others might want on their own accord, a college education to give them a push.

      The president has no right to interfere in personal livelihoods and responsibilities to the extents he continues. The costs are the responsibilities of the student (personal resources) and the guilt is on all who receive increases in their wages, salaries and benefits, including whatever the unions are stealing! have people lost their consciences?

      advertise where government isn't suppose to be (in a creative, understanding way) and how controlled/expensive it's become because of government overreach, favoritism, union preferred, wastes etc. so those others that don't know can build their respects and ambitions towards individual dignity and freedom from government's condescending, costly, controlled conflicts of interests regarding…

    14. get over ti says:

      its simple if you take the loans out ….. PAY THEM BACK!!!!! you are the one who wanted to go to school so take responisibility!!!!! some knew how bad the economy was when they took out loans and why should companies keep handing out assistance like deferments or forbearances to help post pone your payments when you knew you had to pay it back? no other company like credit cards or a mortgage does this. live off what is necessary not anything extra…. pay off your debt like an other responisble adult

      • Brady says:

        No one is asking for a complete bailout. Everyone who takes out a loan knows that they have to pay it back. But when you make a monthly payment for years on a loan and it is not even taking care of the interest you can't live. Why should you be able to buy a car with a low interest rate, but when you want to further yourself you get screwed.

    15. anonymous says:

      This article is misleading and is totally missing the crucial point: the new student loan forgiveness program would NOT lay any burden on taxpayers. Read some real news for actual facts, rather than listening to what this person thinks she knows.

      The last overhaul of student loan debt that that was passed works because it removed the middlemen (private BANKS) from the equation, so that folks pay back what they owe directly to the government, without added interest lining the pockets of the banks.

      Also, on a side note, the jobs that the private lenders claim would be lost with this new plan wouldn't actually be lost… they would become government jobs rather than private lender jobs, paid for by the interest students pay.

      It's not the bad, horrible thing that you all are thinking it is. It'll save a lot of people from financial ruin (and therefore relying on taxpayer money in the form of welfare!) by reducing the financial burden of student loans… and that's being done by removing banks from the picture. That's money that can then go back into our economy in other good ways, keeping businesses alive and people working.

      • adam says:

        Student loan forgiveness??? So basically these people get a freee education! Are you gonna give the tuitin back to all of those that paid as they went? It is only fair!!!! So yes, student loan forgiveness is wrong!!!

    16. Omaha Mom says:

      I think student loans should be repaid, but the interest rate should adjust with the economy. Consolidated student loan interest rate currently 6.8%, but mortgage rate around 4%. It doesn't make any sense that someone who invested in themselves to go to college so they could be more productive and now struggle to find gainful employment, and are shackled by a ridiculous interest rate. I'm sure more would continue to repay if there was actually a light at the end of the tunnel. I've been writing letters to Senators and Congressman, the Secretary of Education, etc. for years! I've come to the conclusion that the simple solution is often overlooked!

      • Jack Baker says:

        It is interesting that the Fed. government is driving down the interest rates for savers, but still supporting 6.8 % interest rates for student loans. I am currently receiving bank interest rates of .01%. I am for reducing the student loan interest rate to .01%, BUT I am not sure that will encourage those with outstanding loans to start paying. I am aware of many proffessional people who are not and do not intend to repay their student loans unless forced to do so.

    17. James Morrow says:

      Very interesting views. What happened to taking/accepting responsibility for your actions. You enter into a contract and take the money. You must pay it back or you are not improving yourself, you're asking the taxpayer to pick up the responsibility….the taxpayer to improve you by paying for your college. Triana above, if it is a good investment, then the student should pay for it. To Omaha Mom, did your contract say the interest rate would vary with the economy? If not, then you should live with the terms and conditions. And sorry Allie, graduating from a prestigious university with a degree in Communications is not worth a lot to the current market. Graduating from the same university with a degree in engineering or computer science will get you into a better position for a sound future. Going to a prestigious school means nothing unless you obtain one of their prestigious degrees. Whatever happened to the fear of failure driving Americans to achieve?

    18. Dr J says:

      "subsidies like Pell grants have increased 475 percent, the cost of attending college has increased 439 percent" College costs have gone up in exact proportion to increased subsidies in order to soak up all the largesse being offered by Washington. If Washington offered to pay restaurants $20 a plate for meals previously priced at $10 the price would immediately rise to $20. Colleges can do the math. The grants are there, raise tuition to soak up all those government guaranteed loans and saddle the students with the bill. It is a travesty! Unfortunately the students are unable to do the math anymore and fall for it.

    19. adam says:

      In order to foregive student loans you must give all the tuition money back to those that paid as they went!!!! No free education here just becasue you took out student loans!! Think of the obvious people…By foregiving these student loans your giving some people a free education and others you are not…..let the lawsuits come!!!!

    20. Tim White says:

      Speaking to one specific segment of college grads — those in journalism — I think it's been a catastrophe. While I'm sure some college and post-grad degrees are appropriate, America has gone overboard. Years ago, there was real investigative journalism by people without college degrees, but with people who grew up in their town and had RELATIONSHIPS. Now, one must have a grad degree to get a job in journalism… and how does that typically help an investigative reporter? It doesn't. It's just part of the malinformed argument that education is important. IMO, education is critical. But there's no reason that it must be FORMAL. An INFORMAL education through an apprenticeship is also appropriate. But the MSM will never admit it.

    21. LibertyAtStake says:

      "It is unfair to forgive student loans on the backs of waitresses and construction workers and the nearly three-quarters of Americans who didn’t graduate college…"

      Spot on. This is one class division gambit where Barry and his corrupt gang of Progressives blew the math.

      d(^_^)b http://libertyatstake.blogspot.com/
      “Because the Only Good Progressive is a Failed Progressive”

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