Borrow more, repay less

Student-loan initiative will encourage increased debt, tuition hikes

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Too many young Americans are borrowing too much money to pay for college that is too expensive, in the hopes of getting jobs that are too hard to come by.

And the president’s new “Pay As You Earn” student-loan initiative changes none of that.

What this unilateral action does, however, is incentivize government expansion, put taxpayers on the hook for more subsidized student debt and ensure already-overpriced colleges continue their decades-long spiral toward unaffordability.

Just another pen stroke in President Obama’s “year of action.”

Obama’s sales pitch for this executive fiat is that by December 2015 an additional 5 million borrowers will be able to cap monthly student loan repayments at 10 percent of income and be forgiven for any unpaid debt after 20 years.

The program does this by expanding a 2010 law that capped repayments for newer loans but excluded borrowers who took out loans before October 2007, or who stopped borrowing by October 2011.

To finance it all, the president – never one to pass up a chance to engage in some class-warfare carpet-bombing – said he will close “tax loopholes” for “millionaires.”

We’re not sure exactly what that means. And we’re pretty sure he doesn’t, either, considering no one in his administration knows how much is even required to fund this program.

“We actually don’t know the cost yet,” Education Secretary Arne Duncan said at a White House press briefing. “We’ll figure that out on the back end.”

How reassuring.

Obama’s unilateral action snubs alternative plans in Congress that seek to address rising tuition costs – the heart of the $1.2 trillion student-loan crisis.

College costs have grown 250 percent in the past 30 years – 25 percent alone since the president nationalized the student-loan industry through a tacked-on provision of the Obamacare bill.

Never mind the inherent inequity of student-loan nationalization – which shifts the burden from statistically well-paid college graduates to the three-quarters of taxpayers who don’t hold bachelor’s degrees. The system simply is unsustainable at its current rate.

Student debt, which already exceeds credit-card and auto-loan debt, is the fastest-growing consumer debt category, swelling by nearly 8 percent a year. And the three-year default rate is at a record 14 percent.

Does this country have enough “millionaires” to pay for that?

The Obama plan – which lasts only as long as he is in office – proposes no long-term solution to the student-debt dilemma. In fact, it worsens the situation by greenlighting colleges and universities to raise tuition higher.

“It induces people to borrow more than they need to, which can have a negative impact on college prices,” said Beth Akers, a fellow in the Brookings Institution’s Brown Center on Education Policy.

One of the more peculiar provisions of the Pay As You Earn plan allows graduates who take government jobs to be eligible for loan forgiveness in 10 years instead of 20.

Try to wrap your head around that for a moment: Someone gets a taxpayer-subsidized loan to pay their way through what is most likely a taxpayer-subsidized university so they can obtain a taxpayer-funded job to avoid repaying their taxpayer-subsidized debt and eventually retire on a cushy pension – funded by, who else, taxpayers.

Who picks up the tab for this cradle-to-grave job corps scheme? It should be called the “You Pay As I Earn” plan.

Actually, Obama’s government-employment provision may be the most practical in the entire Pay As You Earn initiative – by the time some college students graduate and enter the labor market, government jobs may be all that’s left.

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deestafford
28615
Points
deestafford 06/12/14 - 11:08 pm
7
0
Excellent editorial and is spot on in all areas.

Excellent editorial and is spot on in all areas.

Once again, as with the auto bail out, Obama has disregarded hundreds of years of contract law by decree. These people signed a contract that they would repay the loans at a certain rate.

This is just another ploy to gain voters for the Democratic party.

As the editorial states, the biggest problem is the colleges and universities are allowed to charge whatever they want and the government will guarantee them their money. All the while numerous universities have BILLIONS of dollars in their individual trust funds and accounts. Think about the interest on those investments.

Another redistribution of wealth scheme and an opportunity to get more people while they are young sucking on the teat of government as a way of life.

carcraft
27000
Points
carcraft 06/13/14 - 04:26 am
8
0
Is this the next financial

Is this the next financial bubble? Government guarantee of housing loans was the catalyst that lead to the run up of housing costs and caused the eventual collapse of the housing market causing the last economic melt down.

Riverman1
86837
Points
Riverman1 06/13/14 - 04:48 am
12
1
College Is Not For Everyone

A much smaller percentage of the population should go to college.

Most people have an average IQ and that's not suited for true college work.

But colleges will water down their courses to get as many students as they can to keep borrowing to pay professors and those who support the academic life.

If a student manages to graduate, he has a worthless degree and can't find a job.

The education scam is one of the worst cons in our history.

About 3/4 of college students should be learning carpentry, heating/air-conditioning, welding and plumbing.

Rhetor
1020
Points
Rhetor 06/13/14 - 06:30 am
2
11
hmm

To keep up in the industrialized world, we need an educated work force. We're behind in that respect. We're past the days when Southern conservatives should expect to thrive with a sharecropper workforce.

jaymai
390
Points
jaymai 06/13/14 - 07:18 am
3
3
Georgia and South Carolina

Georgia and South Carolina have a much better way to pay for college tuition: Let the poor pay for it through the "Education" lottery.

carcraft
27000
Points
carcraft 06/13/14 - 07:42 am
4
0
Actually one of the areas we

Actually one of the areas we lack workers in is the highly skilled technical fields like CNC and other computer processes that require knowledge of fabrication processes. In the skilled trades you can also make a decent living. Entry level is votec and hard work.

deestafford
28615
Points
deestafford 06/13/14 - 07:45 am
7
1
Riverman, You are so right....

Riverman, You are so right. Many people coming out of technical colleges are making more than college graduates.

It's my understanding that there is a tremendous shortage of welders and a good one can make over $60k plus coming right out of tech school and that is more than a law school grad. Not only that, he will not have the college debt.

Just think, if a young person can get the right guidance of learning a trade such as welding, heating and air, construction etc. and that skill was coupled with business and management training they could eventually start their own company.

Of course, that takes some serious thinking ahead and guidance on the part of the parents. It also takes the parents not having an ego trip from the aspect of bragging about their child attending some hoddity toddy college.

One of the richest people out of my high school class did not attend college yet he owns one of the largest garbage collection companies in Savannah. He now spends his time in bill fishing tournaments.

Rhetor
1020
Points
Rhetor 06/13/14 - 07:49 am
2
8
ignorance is expensive

Ever wonder why the blue states are so much more prosperous than we are? Ever wonder why more industry locates in blue states than down here? Yes, they like our low taxes and anti-union sentiments. But that doesn't make up for the less educated work force that the South offers. Access to an educated work force is reason #1 for prosperity.

Bizkit
32886
Points
Bizkit 06/13/14 - 08:00 am
2
0
"Obama’s sales pitch for this

"Obama’s sales pitch for this executive fiat is that by December 2015 an additional 5 million borrowers will be able to cap monthly student loan repayments at 10 percent of income and be forgiven for any unpaid debt after 20 years." Forgiving debt after 20 years-so moochers don't have to repay any and then in 20 years they are forgiven all? This really infuriates me as it took my wife and I a good 15 years to pay off 140K in student loans. We paid our debt but I have several friends who make no pretense they never plan to pay their student loans if they can get away with it=now I see they will get away with it.

Bizkit
32886
Points
Bizkit 06/13/14 - 08:03 am
4
0
Money doesn't equate to a

Money doesn't equate to a good education. In fact during my research years the most productive faculty were not Ivy league or elite school graduates-course that's anecdotal. Still an education is only worth what you do with it.

Airman
3764
Points
Airman 06/13/14 - 08:23 am
10
0
Heating and Air

A friend's son graduated high school with my boy 3 years ago. The family had money to send him to a good college. He was not interested. He wanted to use his hands. He took a few basic heating and air courses. He got a flunky job with a large heating and air company in ATL area. In six months of learn by doing and hard work he was a team leader. Early in 2013 he ask his dad for a loan of 100,000$ to start his own heating and air business. He explained to his father that he would pay that much for school and not get it back, but loan him the money and he would get it back with interest. Talking to my friend the other day he told me his son now has four trucks on the road, is making timely payments on his loan and is about to buy his fifth truck. He specializes in business and commercial refrigeration. He is still doing home installation and repair. He took advantage of the American dream and took courses online and traing through his supplier. He got his certification and his former employer sends him his business that he can't get to or doesn't think it's profitable enough. Matter of fact he is coming to my house this afternoon. I don't use my upstairs but the A/C went kaput this past weekend and I need it fixed.

cush1944
9683
Points
cush1944 06/13/14 - 08:41 am
3
1
"Let the poor pay for it

"Let the poor pay for it through the "Education" lottery."
I agree but you missed part of it. It is the poor and the dumb but then maybe that is why they are poor.

cush1944
9683
Points
cush1944 06/13/14 - 08:45 am
4
1
"Talking to my friend the

"Talking to my friend the other day he told me his son now has four trucks on the road, is making timely payments on his loan and is about to buy his fifth truck."
Come on now Airman, Obama said he didn't build that business. As if the community organizer would know how to build a business.

seenitB4
90668
Points
seenitB4 06/13/14 - 08:50 am
4
1
And that is the truth!!

About 3/4 of college students should be learning carpentry, heating/air-conditioning, welding and plumbing.

A great post by RM..

seenitB4
90668
Points
seenitB4 06/13/14 - 08:51 am
2
1
Our biggest problem in the US today

We are figuring everything out on the back end...see what we get...amazing that so many can be sooo fooled for sooo long.

dichotomy
34343
Points
dichotomy 06/13/14 - 09:13 am
3
0
Rhetor...."Ever wonder why

Rhetor...."Ever wonder why more industry locates in blue states than down here?"

First of all, I think that is changing rapidly. Growth in red states has been phenomenal lately. Second, it's not because of the availability of college educated employees. It is because of the availability of employees who received a better public school education due to demographics and better qualified teachers in the public school systems. Industry generally does not need a huge number of college grads. They need line workers with a good basic education and the motivation to show up for work every day. Let's take Richmond County for example. Our school system does not exactly have a good reputation for educating or motivating good potential industrial workers. Welfare filers and food stamp recipients...yes......industrial get up and go to work every day workers.....no .

just man
88
Points
just man 06/13/14 - 09:14 am
1
8
Do America have enough

Do America have enough millionaires to tax? Yes. The United States is the richest country. We've over hundred sports players who're millionaires, singers, rappers,and business owners. I don't know what boat brought this editor to this country.

Once again,Senate Republicans chose billionaires over a fair deal for middle class Americans. On Wednesday , Republicans blocked Sen. Elizabeth Warren's bill to provide much needed relief to anyone with a student loan. If the Bank on Students Act had passed, it would've not cost working taxpayers not one dime nor increase the debt Borrowers could have refinanced their loans just like homeowners, paid for by a tax on millionaires. It's downright disgusting that Senate Republicans have yet again blocked America from even discussing legislation that would help millions of young people, seniors and families struggling to pay down student debt.

willie7
984
Points
willie7 06/13/14 - 10:25 am
0
0
"College cost up 250% in the
Unpublished

"College cost up 250% in the last 30 years"---that's cheaper than the cost of the Sunday Chronicle---I paid $2.25 for the Chronicle last Sunday. 30 years ago, I paid 50 cents---300+ percent! Sure, too many young people go to college and never graduate, and too many major in
non-marketable degrees.
Yet, we need this proposal to help those who are debt-ridden.
And close down these for profit colleges whose students own 25% of the debt and not able to pay. Many of them drop out and the investors are making plenty of money. Some of them have commercial budget bigger than their instructional one.

Bizkit
32886
Points
Bizkit 06/13/14 - 11:19 am
2
1
10 most entrepreneurial

10 most entrepreneurial states: Arizona-Rep, Texas-Rep, California-Dem, Colorado-Dem, Alaska-Rep, Missouri-Rep, Nevada-Dem, Vermont-Dem, Idaho-Rep, Florida-Dem
So five blue and five red are doing well.
The most economically stable states-top 25 are Virginia, Colorado, Washington, New Hampshire, South Carolina, Texas, Mississippi, Iowa, Wisconsin, Nevada, Indiana, Missouri, Idaho, Oklahoma, Utah, Alabama, Montana, Tennessee, Ohio, Florida, Wyoming, Nebraska, North Dakota, South Dakota, Alaska. So a mix of Red/Blue some states are mixed like Virginia, Florida tend to go blue while South Carolina tends red. Why do people just make up crap. Progressives are just the worst with that crap.

carcraft
27000
Points
carcraft 06/13/14 - 11:33 am
2
0
Just man, why are college

Just man, why are college loans so easy to get? Because the government guarantees them. People need to get real about debt and understand exactly what they are getting into. Student can not forgiven by bankruptcy . E en if you make good money it is still a burden around your neck. Local colleges are often a better deal AND you can get some excellent professors.

corgimom
33993
Points
corgimom 06/13/14 - 11:44 am
0
5
Dee Stafford, you mean

Dee Stafford, you mean somebody going to tech school can go for free?

Wow, that's a new one on me, I had to pay for my son to attend, and it wasn't cheap.

Maybe it's free in Georgia, but it sure isn't in South Carolina.

corgimom
33993
Points
corgimom 06/13/14 - 11:47 am
1
4
Cush, that man specializes in

Cush, that man specializes in business and commercial refrigeration.

As in, somebody else had to build a business first to provide him with work. See how that happens?

And very few people get a $100,000 loan just by asking. Must be nice to have a parent with that kind of capital, very few people have that.

And if that wasn't possible, he would've had to borrow from a lending institution- he couldn't do it by himself.

He didn't build it by himself, he had an investor.

corgimom
33993
Points
corgimom 06/13/14 - 11:50 am
1
4
I know a young lady who is

I know a young lady who is studying to be a psychologist. She lives at home to save money. She owes $104,000 in student loans and still needs to earn her master's degree.

That student loan debt is crippling for people, something had to be done.

corgimom
33993
Points
corgimom 06/13/14 - 11:54 am
1
4
No. Bizkit, moochers will not

No. Bizkit, moochers will not be eligible. Regular payments have to have been made every month for 20 years. That's a long, long time.

And given how people in this country like to spend, and considering how many people late pay on credit cards, car loans, and mortgages, I think that not too many people are going to qualify.

So rest easy, Bizkit.

carcraft
27000
Points
carcraft 06/13/14 - 12:09 pm
3
0
Corgimom, why would some one

Corgimom, why would some one take out that much? Good grief! My kids worked to get through college, low levels of student loans. Some people use these loans to fund a life style, cars etc. one of my kids bought a car on a student loan. I wanted to kill him. He paid a lot more for that car than it would ever be worth!

KasparHauser
364
Points
KasparHauser 06/13/14 - 12:19 pm
0
0
You can hear the Banjoes Dueling...
Unpublished

All over the CSRA...

Darby
26885
Points
Darby 06/13/14 - 12:26 pm
5
1
"We're past the days when Southern

conservatives should expect to thrive with a sharecropper workforce."

.
Don't know about you, but I've never known or ever seen a "sharecropper".

This post is the quintessential Democrat/socialist/progressive response to just about any economic or social problem facing our nation. Just flip it off with a quick one-liner that plays well with the "base" and move-on to obfuscation and avoidance of the next serious problem.

If only the Dems could or would recruit some grown-ups.

Someone who does not, without even knowing what the problem is, look first to the tax base for it's solution.

slowrider
179
Points
slowrider 06/13/14 - 01:08 pm
4
0
This is like watching a car accident.

This is like watching a car accident. Capping repayment at 10%, and forgiving whatever is left over after 20yrs.... it is an invitation to just NOT CARE about your personal finances.

Academic welfare. Where, or where, will our federal government's reach end....

cush1944
9683
Points
cush1944 06/13/14 - 01:39 pm
3
1
"That student loan debt is

"That student loan debt is crippling for people, something had to be done."
IF YOU CAN'T PAY IT BACK DON'T BORROW IT!!!

Mr. Thackeray
953
Points
Mr. Thackeray 06/13/14 - 02:16 pm
4
0
I repaid mine, over 90K in

I repaid mine, over 90K in today's dollar. This is crazy.

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