• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Pushing Basket-Weaving College Loan Debt onto Working-Class Taxpayers

    President Barack Obama delivers remarks on student loans at the Tivoli Events Center of the Aurarian campus in Denver on October 26, 2011. UPI/Gary C. Caskey

    President Obama’s “blame conservatives” rhetoric was on full display yesterday as he described his plan to provide relief to students overburdened by loan debt that they voluntarily assumed.

    “We can’t wait for Congress to do its job, so where they won’t act, I will,” Obama told a crowd of Denver college students yesterday afternoon.

    The President’s plan includes limiting to 10 percent of discretionary annual income the amount of money lenders can require students to pay. It would also reduce from 25 to 20 the number of years students have to pay on their loans until they are forgiven completely. And all this would be accomplished by once again circumventing Congress.

    The Administration’s plan to forgive all debt after 20 years shifts the burden of paying for college from the student—the person directly benefiting from college—to the nearly three-quarters of Americans who did not graduate from college.

    It also penalizes the taxpayers who have worked hard to pay off their own student loan debt—and who are still making payments—by having to pay off the student loan debt of those who took out more of a loan burden than they could handle, in some cases, to earn a degrees of questionable market value.

    And when it comes down to it, a major reason for tuition inflation over the years is government involvement in the first place. Pell grants have increased 475 percent, while the cost of college has increased 439 percent since 1982—faster than increases in the cost of health care—after adjusting for inflation. Federal subsidies insulate colleges from being remotely worried about spending money wisely or cutting costs. The Center for College Affordability and Productivity points out:

    Universities and even many liberal arts colleges suffer from a huge bureaucracy that is not only expensive, but contributes to slow and often non-innovative decision making. It is not uncommon for schools to have more people working in an administrative capacity than serving as faculty members.

    The President’s proposals would ultimately do nothing to mitigate the cost of attending college. Instead, limiting the number of years a student is eligible for federal subsidies, tying aid to merit, and encouraging states to put more course content online would go much further in popping the higher education “bubble” and reducing college costs.

    Posted in Education, Featured [slideshow_deploy]

    22 Responses to Pushing Basket-Weaving College Loan Debt onto Working-Class Taxpayers

    1. Chris says:


      How ever am I going to be able to repay my $120,000 student loan for my 6-year B.A. in Cultural Dynamics and Societal Impact of Lefthanded Leprechaun Transgender Underwater Basket-weavers when the only places that will employ me require me to hide most of my tattoos, remove my facial piercings and use the phrase "Would you like fries with that?"

      I feel that I am totally entitled that my first post-college entry-level job should be able to support me in the same lifestyle that it took my parents 30 years of hard work to attain.

      It's just not fair. It's a conspiracy, man.

    2. Sean Leroy says:

      Obama will be Obama…But, Conservatives had better address the real issue here and that's the rising cost of education. Higher Ed is quickly becoming for the uber-rich only (I went to school at a State University, not that long ago, for the same price as a JuCo today – in my area, Seattle).
      Also, if the loans are paid back, does that money ever go back to the tax-payer that funded it? Nope. The problem is larger than each side either admits or is willing, at least, to address.

    3. Chris says:

      Perhaps getting Big Brother (Nanny) out the arena might help. No simple answer there, but my first degree was partially supported by Mom and Dad's rooming house while my summer jobs, part time jobs and student loans sufficed. My subsequent post-USAF, GI-Bill-subsidized, degree was also supported by more summer and part time jobs, a cashed-out DoD retirement-to-date and another student loan. Still, the combined tuition of one degree at a Cal-State University campus (1972) and the other at a private denominational school (1989) probably equates to only one undergrad degree nowadays. I agree, it's a tough row to hoe.

    4. Heather says:

      One-word answer to the "rising cost of education": Boycott! Stop paying these outrageous costs–and make sure the college presidents KNOW it's a boycott. Surely all of these tech-savvy OWS types could organize something like that? No, wait, it's fine with them that someone else pays for their "education".

    5. Bobbie says:

      this isn't how personal responsibility is taught or learned, Mr. President!

      College students, please protest the wages and benefits of your staff and administrations. If they're sincere to your concern, they'll take a cut in pay or work pro bono. Please don't burden my family with the costs of your personal matters.

    6. Eric says:

      I graduated from law school in '08 with about $180k in student debt. And it was my choice.

      After college, I sat down and made a decision. I could go to law school and incur an additional $150k in loans, or I could enter the workforce. I looked at the job market (good at the time), evaluated myself against what would be my competition, and decided it was worth the risk. From that point out, every class I took and every activity I participated in was to better my job prospects (i.e. no seminars on the constitutional rights of killer whales). Now that I'm out, I pay over $1,500 a month in loan payments (which sucks), but I can afford it because I made myself marketable and got a job. And while I could go out an buy a new car and other toys, instead, I am still driving the same 14-year-old POS that I did in college so that I can free myself of this debt as quickly as possible.

      For those who CHOSE to take on $150k in loans so that they could spend four years in a circle studying Kantian philosophy, only to graduate without a job, I have to ask, "What the f__k did you think would happen?"

      These OWSers demanding student forgiveness are infuriating. Nobody put a gun to their heads. The big evil bank didn't force them to take out loans. If they think I am going to shoulder not only my loans but theirs as well, they are out of their minds.

      • paddy says:

        Eric, good for you! That is what reasonable, responsible people do…count the cost. But current students believe everyone is entitled to a college education and no one should think about the cost. Everything should be provided. We will be forced to pay for these loans, many of which were spent by students to buy clothes, cars and vacations instead of tuition and books. I work in a University and see it all the time. I repaid what I borrowed, and they should also. Many of them need to be learning a trade instead of going to college. Many of them refuse to think about working full time and going to school part time–the old pay as you go method, because, as they whine: "it would take, like, forever!" The only good part might be that the ones who actually do get and hold a job, sooner or later, they will be taxed to pay for what they blew off.

      • Lou Fougere says:

        Your honesty and integrity are refreshing. You are two generations behind me, and you give me hope that there are still people around who still understand the concept of hard work and dedication. Thank you and good luck with your career, whatever it is.

      • Brad - Detroit says:


        Thank goodness the generation after mine still has some people with common sense. I went into college in the fall of '88 without a declared major. After about a year and a half and the economy worsening, I decided to get an engineering degree because in the early '90's, that was about the only degree that seemed to be expanding and hiring. I didn't do it because I thought engineering was going to be fun, exciting and easy – it's because I wanted my degree to be worth something when I graduated. Working part-time during the school year and long hours in the summer was not going to be wasted on a piece of paper that only looked good in a frame in my parent's basement. Good for you and good luck.

    7. Lloyd Scallan says:

      Throughout the history of this nation, has their ever been a president or administration any more devious,
      dishonest, deceptive and corrupt than Obama? Everything he does is contray to our American values. This latest ploy is exactly the same with the same predictable outcome. To pit American against American in hopes that we will turn to socialism to save them.

    8. Eugene says:

      Do the student-loan statutes permit the Administration to make these changes? That is, do they permit the President to change the operation of the student-loan program and the repayment of loan amounts this much without further legislation?

      Has anyone found that discretion in the black-letter law?

    9. Mike, Wichita Falls says:

      "The President’s plan includes limiting to 10 percent of discretionary annual income the amount of money lenders can require students to pay."

      Wait a minute. I thought the federal government, under this regime, took over the student loan program from those evil banks. All the more reason to think the taxpayers will be on the hook.

      I wish the President's plan included limiting to 10% of discretionary annual income the amount of money the federal government can require in taxes from all people.

    10. Laura W. says:

      As a college student myself, who has worked hard to save some money for college and apply for scholarships (and studied hard so I will be considered for said scholarships), I find it more than a little frustrating that so many of my peers are clamoring for their student loans to be subsidized or forgiven. I've been able to stay out of debt thus far, but this has required forgoing many "necessities", such as a car, stereo system, new textbooks (when possible), smart phone, gaming system, and expensive (or even mid-priced) clothing. I even considered taking my first two years of school at a community college, to save on costs, but the state school I also applied to gave me enough scholarships to be competitively priced. I've also taken on a part-time job while taking 1.5 times "full-time" enrollment in courses, so I can graduate with two majors and a minor at the end of my four years as an undergraduate student. It's not fair to those of us who have worked hard and made some sacrifices to expect us to subsidize those who have been less diligent or farsighted, when they are still paying off student loans years down the road.

    11. Slick says:

      What are these students thinking???? They APPLIED for loans, they SIGNED the paperwork promising to repay the debt, and NOW they want to be given a ALMOST free ride???

      Let's think about the long-term ramifications of this proposal the President is putting for to "pacify" our non-motivated young people. So let's say they FINALLY find the job of their dreams, make those payments for the 20 years . . . what happens after that??? Well, they have become a part of the tax-paying public, and they will be paying the debts for thousands of people just like them – who felt they were ENTITLED to a "fix" – until the day they QUIT working and paying taxes . . . or they DIE!!!!

      So instead of being on the hook for the total amount of their debt, they will – through their taxes – pay not only what is left of their own debt but every student from Day One forward!!!!! Be careful what you wish for . . . you just might get it!!!!!

    12. TimAZ says:

      I agree this will pop the higher education bubble. There should be no bailouts either. The only bailouts we should except are the liberal professors that couldn't exist in American society outside of a College Campus, scurrying like rats from a sinking ship. Let them fail and knew and better colleges will replace them as the free market allows.

    13. guest says:

      Everyone benefits from an educated population, not just the people with degrees. Taxpayers, many of whom didn't go to college, fund state colleges through tax expenditures. No one thinks that's inappropriate.

      • Slick says:

        WHAT?????? So what are you saying . . . that even though a lot of taxpayers DIDN'T go to college, they have benefited from those who did so the uneducated should pay???????? What EXACTLY are you saying???

      • lights on says:

        WOW! guest, you are one of the collection of indoctrinated. Don't speak for everyone cause you're absolutely wrong. education is one thing, engineering minds in a controlled environment is another. The only one educated is the sole benefit of that one. College is now nothing but indoctrinated influence appropriate for an agenda of an outside influence, but not appropriate for any individual with minds of their own. People today and in public show much more rounded intelligence and intuitive common sense with a high school diploma than those with said college degrees in hand! Education is part of the ruse.

    14. Dick says:

      Its time to shine a bright light on BIG EDUCATION.

    15. margaret says:

      I think the "student loan program" should be investigated. Every so often it comes out about big names in the world who defaulted. Isnt there some accountability for people that default, like employment. How about publishing a list of their names, of course that would be another government department. My children & grandchildren are & will be paying their student loans for a long time. They dont expect to have them forgiven. Re: Obama on campus in Denver, arent we in an election year where anything goes?

    16. FedUpMan says:

      It seems to me that most Colleges specialize in "weird" feel good programs that are designed to make money for the colleges and leave the students with a "degree" that is NOT useful for any job in today's job market at all. I mean $40-50k debt and a job for $30k (if you can find one) is a terrible ROI (return on investment). I personally know 6 kids who graduated from college after 5 years with massive debt that had to take menial jobs just to eat. The days of get ANY degree are OVER, if there was ever such a day.
      Of course if you get a hard science, medical or Is (computer) degree the ROI is MUCH better. The problem is that most kids do not take these hard courses and settle for a vanilla degree that gets them no where.

    17. Leslie says:

      Most of these converastions are obviously ignorant to the difficulties students face. I ended up with about $32,000 in student loan debt,. I was valedictorian, graduated with a 4.0 in a science field, went onto grad school (which was paid for by a teaching associateship), and couldn't find a full-time job for 2 years. So what, am I lazy? Did I get a 'feel-good' degree? No. I now make more a year than my student loan debt, thank goodness, but bills pile up as you try to make your student loan payments when you're searching for a job in this economy. The days of working yourself through school and still doing well are just about over. So before you start judging us, walk a mile in our shoes. I all bills and student loans on time every month,but the burden is overwhelming. I am 27, and cannot even fathom the day where I feel financially stable enough to have children and buy a home. That is what students today face. So how about you get off your high horse and talk to some of us.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.