Skip to comments.Obama’s Student-Loan Takeover
Posted on 07/31/2010 5:42:04 PM PDT by Bad~Rodeo
Obama's healthcare "reform" legislation included a federal takeover of the college student-loan business. Obama touted this aspect of "reform" as a way to save $68 billion over the next 11 years. The savings would go to pay for expanded Pell Grants for low-income students and to help low-income graduates pay back their student loans. But more is going on here than the standard Obama redistributionist impulse. Student loans have become a weapon to attack and control private colleges.
Federal government involvement in student loans dates from the Higher Education Act of 1965. Federal interest-rate subsidies made loans to "qualifying" students more affordable. The loan-subsidy program was expanded in 1972 with congressional authorization of "Sallie Mae," a government-sponsored enterprise that subsidized private-bank originated student loans.
Through Sallie Mae, politicians targeted different groups and various areas for special treatment in the name of "fairness." The presence of increasing federal subsidies allowed colleges and universities to dramatically raise their tuition, "fees," and other student costs in a cost/debt death spiral that left too many college grads with six- digit debts at the beginning of their post-college careers.
Over the years, attempts to control escalating program costs and student debt through privatization didn't work. Rather than dismantling the federal-loan program in favor of truly private-sector solutions, in 2004 Salle Mae was spun off as a private corporation (SLM Corp) which still counted the bulk of its "business" administrating the Federal Family Education Loan Program through private banks.
For Obama, the evil in this program was the "profit" the private banks made originating these subsidized and guaranteed loans. Last month, the federal subsidy program ceased and the direct federal-lending program took over. SLM Corp was left with $145 billion in loan guarantees that included a substantial portion of non-paying borrowersstudents who, on graduation, remained unemployed or underemployed during the recession. Once again, federal intrusion into a private relationship (student and college), undertaken for the noblest motives (expand college opportunities for deserving, but poor, students) left students with crushing debt, colleges with budget dependence on the government, and private investors and taxpayers picking up the mounting losses. Within days of the federal takeover of the student loan program, this dysfunctional picture got worse. Obama attacked private for-profit colleges like the University of Phoenix.
There are 14 of these publicly traded private colleges in the U.S., enrolling
the lamestream media will pay for not covering this liberal stuff
WILL THE DIMOCRAPS EVER WAKE UP AND STOP THIS BASTARD FROM DESTROYING OUR COUNTRY????????
Like sheep being led to slaughter
Just like they have paid for not properly vetting Bambi?
Naah... they'll just run another episode of Real House Wives, another NASCAR Race or another WWF Match and all will be fine with the world..
I agree with student loan reform, actually I don’t agree with student loans backed by the Feds, but if you are going to have a program then the dollars available should be based on default rate by institution and major. More dollars for the students of institutions that pay it back than those whose students don’t.
Oh damn, Nascar Nationwide race is on, thanks!
Interesting, I don't recall having heard/read this before. Of course it's been a few years
And the depressing news just keeps coming.
And, if the Administration in control of the “must payback” no bankruptcy excuse loans says you owe them, then you must work for them. How many people in default to the government? Lots of kids who were given loans under the same criteria as those who got HOME loans that could not be paid back. Bubble number 3. (Credit cards #2) Uh-oh, did I just give the Marxists another idea in how to enslave America?
“Remember in November!”
November isn’t going to mean squat if your shiny new politicians do not undo the damage that has been done.
In fact, the more establishment Republicans that get in, the worse it’s going to get. The GOP is on this.
Vote right-wing fighters, or get used living under the left’s thumb.
Not as much as it's a way to control the graduates and those that will be allowed to attend.
When your son/daughter graduates with a $200K loan they will tell him/her where to work and how much they will make.
This program will be used to give loans to the "underprivileged" and then forgive their loans when they are given degrees through social promotion so they will have no financial burden. They will claim this is part of "making up for the history of racism" in the U.S.
Prospective students who want loans will have to become the ultimate butt-kissers of the local apparatchik in order to qualify.
NASCAR has given in to the “diversity” game...
Yet Obama wants the 'profit' to go to the government instead. I am currently paying 1.48% on my student loan. What rate will the government monopoly be offering?
Is this the modern version of the iron rice bowl?
This is just the 2010 version of the 1990’s housing bubble - force lenders to give loans to people who will have all sorts of reasons and incentives to never give them back, have the government back the loans and eventually forgive many many of them, and then make up the shortfall with taxpayer - make that rich people’s - money - one more scheme to share the wealth.....
Private colleges will have student loans cut off just until they set up “Black Studies” programs, assign Howard Zinn in American History, fully unionize their staff, and make a few other such appropriate changes.
If Obama can run the auto industry, offshore oil and health care, then surely he can manage private universities too!