Opinion

The Great Debate

Student loans: Exploiting America’s young

By Douglas Holtz-Eakin
July 1, 2013

President Barack Obama talks about the rising costs of student loans while at the University of Iowa in Iowa City, April 25, 2012. REUTERS/Larry Downing

Obamacare was paid for on the backs of students.

You may remember that Obamacare staggered over the legislative finish line in 2010 with $19 billion in profits from changes to the student loan program. The changes included nationalizing federal student lending and setting loan interest rates high enough to generate profits to cover the healthcare costs.

Monday, President Barack Obama and the Democratic-led Senate again put their political and legislative priorities ahead of students and allowed their loan interest rates to double.

This student loan episode cements the Obama administration’s continuing pattern of economically exploiting  younger voters. Because of the Obamacare-created Federal Direct Lending Program, a 2009 freshman who qualified for federal subsidies and borrowed the maximum Stafford Loan every year will graduate with a financial penalty of over $400 more in debt than if markets had set interest rates. A more affluent freshman, who did not qualify for subsidies, will carry an additional $1,400 in debt. Meanwhile, a graduate student, who entered a three-year program in 2009, will be facing nearly $3,400 more in debt as he or she seeks to launch a career.

In passing Obamacare, Washington took its eye off the economic recovery. As a result, the unemployment rate for workers aged 20 to 24 remains stubbornly above 13 percent; the rate for those ages 25 to 34 is more than 7 percent, and the duration of unemployment remains at levels not seen since the Great Depression.

The House of Representatives recently passed a bill shifting student loans back to market-based interest rates. The advantages of this approach are so evident that even President Barack Obama advocated it in his budget proposals.  Kudos to the White House for recognizing that price-fixing is never a good idea.

The House bill reduces current rates for all college borrowers and saves students up to $1,413. At the same time, it reduces the drain on taxpayers by roughly $4 billion over the next decade. It also insulates the program from the machinations of bureaucrats setting arbitrary rates.

Sounds all good.

Unfortunately, the Senate failed to act — preferring the status quo, They are willing to kick the can down the road for another couple of years. As Senator Tom Harkin (D-Iowa), the chairman of the Senate Health, Education, Labor and Pensions Committee, stated “Let’s put this off for a year.”

The White House failed to lead, changed positions from its budget-proposal outline and caved to the Senate — embracing its central planning approach.  This after the House passed a solution in line with the president’s own budget, and some Senate Democrats expressed support for this solution.

The resulting stalemate means that interest rates will now be fixed at 6.8 percent. This may be good politics for some. But there is one clear loser: students.

Let’s hope that the young find jobs soon. After all, they’re now expected to pick up yet another tab. Federal debt has exploded since 2009 and is projected to nearly double to $19 trillion in another 10 years.

It used to be said that federal debt was a problem for future generations. But no longer.  The interest alone will become a federal agency as large as the Pentagon in 10 years. Unless young Americans actively control the debt over the next two decades, the economic damage will be incalculable.

It is a bleak picture and at odds with the administration’s popularity with young voters.  Perhaps the bloom is finally off the rose.

The same Obamacare that resulted in higher loan rates for students is built on a foundation in which young Americans are forced into insurance pools that subsidize the coverage of the older and sicker. To do so, it will likely raise the health premiums of young Americans dramatically. As health insurance premiums rise, fewer will buy insurance. Indeed, if the premium increase shock is an all-too-plausible 30 percent hike, 45 percent may just pay the tax penalty and stay out of the insurance pool.

In light of this pattern of economic abuse, the intransigence of Senate Democrats on a permanent fix to the interest costs on student loans is not surprising. But it is no less costly to young Americans.

 

PHOTO (Insert): President Barack Obama shakes hands before he speaks about the rising costs of student loans while at the University of Colorado at Boulder in Colorado, April 24, 2012. REUTERS/Larry Downing


Comments
27 comments so far | RSS Comments RSS

It is wrong Wrong WRONG! Education should NOT be a for profit business, just like healthcare should not be a for profit business. The youth of today are either saddled with student loan debt, or coming back from serving in the military with no GI bill or incarcerated for minor non violent arrests. Jails should also be a “business” profiting off how many cells they can fill.

Posted by mmcg | Report as abusive
 

Jails should NOT be a business….

Posted by mmcg | Report as abusive
 

The young people stood by this President through two elections. It was obvious to anyone with a reasonable amount of intelligence that the burden of Obamacare and the federal takeover of Sallie Mae were going to fall on young people. It is also obvious that as these same young people enter the work force and their incomes increase over the years they will be penalized for any financial success they enjoy via the more progressive tax rates on wealth generators, increased capital gains taxes, and tax overrides they will endure to pay for deficit spending and expanded entitlement programs of the past 20 years.

It is only when these same young people learn that their votes today will hit their wallets tomorrow, and that big government imposes a burden on them not experienced by previous generations. Yes, you are the ones (older workers and retirees) we have been waiting for.

But when you’re young, you are inclined to embrace ideologies without clearly understanding the long term impacts. Over time, they will learn that their vote has consequences–when you are trying to raise a family, applying for a mortgage while burdened with a student loan and your monthly Obamacare premium, and higher Medicare taxes on your payroll check.

A young person only needs to look at California, New York, and Illinois for a view of the future they embraced. Condemn the private sector and embrace government at your peril. The sad part is that they will pay for the voting transgressions of their youth, and it will be virtually impossible (and extremely painful) to unwind the legislation or displace the same politicians they supported.

Be careful what you wish(ed) for, you just might get it.

Posted by COindependent | Report as abusive
 

You’re forgetting the other ill that has befallen my generation, underemployment. Too many people in their 20′s got degrees and earn less then a middle class salary, and too got their high school diploma, work full time, and still don’t earn a liveable wage. That is the real failure neither party addresses.

Posted by wildcat27 | Report as abusive
 

The federal debt is expected to “double” to $19 trillion within ten years? Really? The current debt level is almost $17 trillion and will probably exceed $19 trillion within a couple of years. Someone needs a refresher in basic arithmetic.

Posted by ptiffany | Report as abusive
 

Q1: Why are student loans exempted from the standard consumer protections that exist for credit card debt, medical bills, etc.?

Q2: Why are student lenders exempt from the Fair Debt Collection Practices Act?

Q3: Why can’t student loans be discharged under Chapter 7 bankruptcy just like any other kind of debt mentioned in Q1?

Q4: Why is our government just pretending to care about students when their actions indicate they only care about profits?

It’s really ironic that politicians have been wailing and gnashing their teeth about predatory lending practices among payday lenders and mortgage brokers when the student loan industry is just as bad, but they couldn’t care less about that. They’re just pretending to care in order to score political points. Read the fine print, and you’ll see their proposals to “help” students really won’t help anyone.

Imagine paying regularly on your student loans for 10+ years – at more than double the 3.4% rate everyone’s up in arms about (8.5%). Not only does your balance never go down, it doubles.

Now imagine you’ve been looking for a full-time job for 10+ years, but you’re too old, over-qualified, blah, blah, blah. Imagine you got cancer and couldn’t work. You think the student lenders care? Think again. They’ll just keep piling on interest and fees.

Can you refinance for a lower rate? No.

Can you negotiate for a more affordable payment? No.

Does anyone in the student loan industry really have a nanogram of compassion or humanity? Hell no.

If you really want to do something that will help people with student loans, then copy and paste these links into your web browser. Sign the petitions and get your fellow student loan victims to do the same.

http://tinyurl.com/ov4fmgw

http://tinyurl.com/o7w8kz3

http://tinyurl.com/ovy3ehm

Posted by NaimaNada | Report as abusive
 

@COindependant

As a young person who supported Obama through both elections (but voted third party because my vote is irrelevant in my location), my disappointment lies primarily with older generations, and their commitment to screwing me as hard as they possibly can. The democratic party platform is a set of sound principles, but they do not work for every community. We run into problems when we try to implement these principles into the centralized system that previous generations have created. Both Democrats and Republicans are guilty of playing into a system that centralizes everything. The extent of the centralizing is so absurd as to be beyond belief. I think that my generation rejects this, and it’s evidenced in actions like the recent legalization of marijuana in Colorado and Washington. This is in direct opposition to federal law, largely because Congress has proven themselves time and again to completely and utterly irrelevant, ineffective, and incapable. I think a resurgence in federalism will allow my generation, idealistic as we are, to implement Democratic ideals without infringing on the communities that reject them.

Posted by MaxClark | Report as abusive
 

Considering that college grads can make $500K to $1M or more in lifetime earnings improvements, they shouldn’t act poor just because they haven’t started earning yet. $25K, $30K, $40K in debt. Easy to erase. You did pick a degree that’s wanted, right?

Posted by Chris_colorado | Report as abusive
 

This author is as right-wing as a Tea Party nutcase can get. Read his credentials. Probably BFFs with Grover Norquist.

Posted by JL4 | Report as abusive
 

@ COindependent

just to tear apart your silly comment, let’s review the first paragraph:

“…same people enter the work force and their incomes increase over the years”

LOL, pay hasn’t increased over inflation for the middle class since the 70s, maybe you should have voted more wisely!! maybe the workers will make more over time due to experience gains while in a career but unless there are 2 people working you still get left behind financially with food and energy prices rising faster than the current inflation index constantly eroding paychecks.

“they will be penalized… via the more progressive tax rates on wealth generators

You are butt ignorant. Income taxes have been progressive since their inception by Wilson and they are at their LEAST progressive today and have been since about when our financial system collapsed… WIERD!! also, the “wealth generators” are the only people who still have money. do some research and you’ll find they are the ONLY people who have recouped their loses since 2007 while EVERYONE ELSE IS WORSE OFF. thanks for generating wealth so that you can keep it .1%!! i’m glad it’s trickled… back to you?

“increased capital gains taxes”

the rich are the ones who win with low taxes here, not the middle class. the middle class holds wealth through property which is already taxed at a higher rate over the length of ownership than capital gains. again, great voting old dude. you’ve done a service to those who don’t need it on the off chance you can make a buck.

“and tax overrides they will endure to pay for deficit spending and expanded entitlement programs of the past 20 years.”

wow. so at the end you prove the very people YOU voted in for 20 years, and at least 2 are presidents you voted for regardless of which party you claim to be a part of, are the ones causing the problems. be proud you can point the middle finger at young people after already fudging up the whole system. you are a gene-us, and a skaw-lar. didn’t mean to rant, but ignorance needs to be obliterated.

Posted by trasisi | Report as abusive
 

@ COindependent

just to tear apart your silly comment, let’s review the first paragraph:

“…same people enter the work force and their incomes increase over the years”

LOL, pay hasn’t increased over inflation for the middle class since the 70s, maybe you should have voted more wisely!! maybe the workers will make more over time due to experience gains while in a career but unless there are 2 people working you still get left behind financially with food and energy prices rising faster than the current inflation index constantly eroding paychecks.

“they will be penalized… via the more progressive tax rates on wealth generators

You are butt ignorant. Income taxes have been progressive since their inception by Wilson and they are at their LEAST progressive today and have been since about when our financial system collapsed… WIERD!! also, the “wealth generators” are the only people who still have money. do some research and you’ll find they are the ONLY people who have recouped their loses since 2007 while EVERYONE ELSE IS WORSE OFF. thanks for generating wealth so that you can keep it .1%!! i’m glad it’s trickled… back to you?

“increased capital gains taxes”

the rich are the ones who win with low taxes here, not the middle class. the middle class holds wealth through property which is already taxed at a higher rate over the length of ownership than capital gains. again, great voting old dude. you’ve done a service to those who don’t need it on the off chance you can make a buck.

“and tax overrides they will endure to pay for deficit spending and expanded entitlement programs of the past 20 years.”

wow. so at the end you prove the very people YOU voted in for 20 years, and at least 2 are presidents you voted for regardless of which party you claim to be a part of, are the ones causing the problems. be proud you can point the middle finger at young people after already fudging up the whole system. you are a gene-us, and a skaw-lar. didn’t mean to rant, but ignorance needs to be obliterated.

Posted by trasisi | Report as abusive
 

The fact that Obama has made a highly successful career out of exploiting the young is hardly news.

As to your point that student loans should be “market-based”, I would say that a “market-based approach” to anything would be a huge mistake, mainly because there are little or no controls over the market, which inevitably leads to exess, which leads to exploitation of the markets, which leads to market collapse.

In other words, the present “market system” is broken for a whole lot of reasons it would take a book to fill.

For someone to keep repeating the phrase “market system” over and over like some broken doll is inane and incredibly annoying.

Posted by EconCassandra | Report as abusive
 

The right-wing drivel here is palpable and the dorks here seem to fall for it. The reason the Senate failed to act is becuase the bill would tie interest rates to Federal interest rates and requires students to pay “market rates” for loans. This won’t be a big deal now, but if interest rates rise, students will be at the mercy of the market. We wouldn’t want those pesky ” bureaucrats setting arbitrary rates.” And of course, the real purpose of the article was to slam Obamacare, not the student loan legislation. Republicans get more stupid every day.

Posted by forzapista | Report as abusive
 

I agree with forzapista. Douglas Holtz-Eakin’s opinion seems to be more about obamacare than student loans. The connections are weak and unsubstantiated. The ideology is evident in every paragraph and is clearly written for the choir. This is definitely pure “right-wing drivel”.

Posted by LEEDAP | Report as abusive
 

I also agree with EconCassandra. Douglas Holtz-Eakin’s derogatory comment, “embracing its central planning approach” relies on the reader’s acceptance that only pure market based solutions are rational. This kind of Austrian School thinking blindly ignores China’s very effective economic model. It has to ignore it because to acknowledge it would undermine the “belief” that only pure market approaches can avoid economic collapse. This is utter ideological nonsense.

Posted by LEEDAP | Report as abusive
 

Where to begin?

“Nationalization” of student loans is an incorrect term. Stafford loans – the loans that were affected – are not only federal student loans now, but they always were federal student loans. Why do you think you had to fill out a FAFSA – a Free Application for FEDERAL STUDENT AID – in order to qualify for one?

Before the passing of “Obamacare” there were two Stafford loan programs, the Direct Loan program and FFELP – the Federal Family Education Loan Program. (You will note the word “Federal” in FFELP.) Under FFELP, loan companies like Sallie Mae provided student loans that were subsidized by the Department of Education – for a subsidized loan, the federal government would pay the interest to Sallie Mae for the entire length of a student’s enrollment and grace period. So for every student loan taken out, for the entire length of time that student was in school, the federal government was paying the interest on that student’s loans to Sallie Mae.

FFELP loans were done away with because of the simple fact that it costs the government more to subsidize loans made by private lenders than it does to provide those loans directly. Cutting out the middleman saves money, it’s that simple. Plus, the Direct Loan program as it exists today – what the author is referring to when he talks about “nationalizing” student loans – already existed before “Obamacare.” The Department of Education was already providing student loans directly to students. The new law simply did away with the FFELP program, which cost the government (and thus, the taxpayers) more than the Direct Loan program does.

As to the student loan interest rate, it’s obvious that the author knows nothing about student loans or student finance. Firstly, prior to the 2006-2007 award year, interest rates on federal student loans were variable, going as high as 9%. For 2006-2007 onward, they were changed to a fixed interest rate of 6.8% – yes, 6.8%. You see, that was the standard fixed interest rate for undergraduate Stafford loans. It was intended to be that way. When the economy started to tank and unemployment started rising, it was decided that the interest rate on subsidized Stafford loans would be temporarily reduced – not permanently, temporarily. For the 2008-2009 award year, it was lowered to 6%; for 2009-2010, 5.6%; 2010-2011, 4.5%; 2011-2012, 3.4%. The interest rate was supposed to return to normal, 6.8%, for the 2012-2013 award year; however, last year, Congress decided to extend the interest rate reduction for one more award year. Thus, this year, for the 2013-2014 award year, the interest rate is supposed to go back to normal, meaning 6.8%.

This is not new. This is not shocking. This is not out of the blue. This is what was supposed to happen. This is how it was planned in the first place.

It’d be nice if at least one pundit somewhere would bother checking their facts and their history. Or at least check with someone who knows what they’re talking about. Someone like me, who’s been working in financial aid for years.

Posted by EazyE | Report as abusive
 

@Co-independent you wrote, “It was obvious to anyone with a reasonable amount of intelligence that the burden of Obamacare…[was] going to fall on young people.”

ALL healthcare insurers rely on the premium payments of the healthy (primarily the young) to pay for the unhealthy (primarily the elderly).

Posted by JL4 | Report as abusive
 

The trends supported by the right are concerning for our future, as 300 million Americans hope to prepare our kids to be the ones rewarded when competing with a global middle class that will apporach 3 billion in their lifetime:

The rise of smaller private colleges as student loan mills.

The disincentives for higher education of any type unless you can ‘borrow from your parents’.

The false choices, like having to choose between better english, or science math and gifted programs (we need both, especially here in the southwest where better english would lift more kids up into life-long higher achievement).

The backwards anti-science bias and even rewriting of history (less Jefferson in Texas books) that politicians force onto schools, we’re not justanti-evolution and anti-climate science, we’re even anti-metric.

We had great success with two generations of easier access to higher education: the GI Bill and the middle class wages of the GI Bill adults that schooled the next generation. Now in the face of growing competition, we shoudl be vigorously promoting competition to raise up new inventors, engineers and entrepeneurs, not raising barriers to schooling.

Posted by Decatur | Report as abusive
 

make that ‘promoting education to raise up…’ instead of the repeated word ‘competition’, above

Posted by Decatur | Report as abusive
 

@ JL4 –

In your reply to COindepent you deride him for his comment, then stating “ALL healthcare insurers rely on the premium payments of the healthy (primarily the young) to pay for the unhealthy (primarily the elderly)”, which is EXACTLY how insurance is supposed to work, by spreading the risk (i.e. Insurance 101).

IF your eliminate those at higher risk, then it is no longer insurance, but deliberately “cherry picking” to increase your profits.

THAT is what a “market solution” would do — increase profits at the expense of those who should be able to afford insurance if it was properly structured.

When THAT happens, it needlessly burdens the economic system, and passes on those costs to the public in the form of higher taxes, mainly so a few can manipulate the system for more profits.

The present “market system” is a scam designed to enrich the few at the expense of the many.

Posted by EconCassandra | Report as abusive
 

@ Decatur –

You are obviously directly involved in education, judging by the focus of your comment.

However, I must take strong exception to what you are saying for the following reasons:

———————————–

(1) You state “The trends supported by the right are concerning for our future, as 300 million Americans hope to prepare our kids to be the ones rewarded when competing with a global middle class that will apporach 3 billion in their lifetime”.

I am not sure who you mean exactly by the “right”, since our entire government is actively involved in cheating future generations of a chance for any kind of decent life, much less that of the anomalous “middle class” that is fast disappearing.

The argument of “competing with a global middle class” is a strawman argument to distract the American people from the fact that our main problem with education is our own government.

I have said before in previous comments that there is no economic reason why the US elite should improve our school system when it is much cheaper to simply (a) export jobs to a third world country, or (b) for those jobs that cannot be exported, to import cheap labor from the “global marketplace”.

The solutions to our incredibly poor “educational system” do not lie within the school system as most would have you believe (e.g. poorly trained educators not up to the task), but with the ability of the elite class to shift jobs and labor at will.

There is absolutely NO WAY the US educational system can EVER “compete” with the global labor market.

To give you an example, Walmart employment policies are a good proxy for what is happening to the US economy. They hire at the lowest wage possible, with no benefits and utilize “part-time” labor as much as possible.

THIS “Walmart Model” is where the US educational system is taking us — to a system of low paid workers with an extremely high percentage of “temporary” employees — who would function like “seasonal workers” hired by companies when they need additional labor (e.g. I used to use “Manpower Inc” to fill temporary accounting positions during audit season), then simply let them go after they are no longer needed.

THAT is the IDEAL WORKFORCE for ANY company for jobs that cannot be outsourced overseas — no lengthy job search, health care and benefit packages, vacation issues, or potential problems when an employee doesn’t work out (legal issues) — ALL aspects of hiring employees which cost money (i.e. lost profits) for the company.

THIS is what the free market system is doing to US education, and the American people are apparently too stupid to understand that the ONLY thing companies care about is PROFITS.

WHY, when the entire work is a “temp agency” would they willingly choose to invest in US schools?

(2) You state, The rise of smaller private colleges as student loan mills” to which I agree, and is proof of my accusation, since NONE of these people will EVER get decent-paying jobs and a future as a result of their efforts, but only MASSIVE amounts of student loan debt.

(3) You state “The disincentives for higher education of any type unless you can ‘borrow from your parents’” which is absolutely true, since from an elite point of view, their children are the future leaders of this nation, so why should they deliberately undercut their the future of their children by funding a school system of those who are not “leadership material”?

The huge reduction in school funding for higher education that you see now compared to a few decades ago is literal proof of what I am saying.

(4) You state “The false choices, like having to choose between better english, or science math and gifted programs (we need both, especially here in the southwest where better english would lift more kids up into life-long higher achievement).”

NO child should be allowed into our school system who is not fluent in English.

ANY argument to the contrary is NOT sufficient reason to justify holding back those who are fluent in English, since it handicaps them right from the start and many never catch up.

THIS is probably THE MAJOR reason why our school system is struggling — we have deliberately dumbed it down to the lowest common denominator, and then we whine because our school systems are so poor.

Attempting to create a level playing field at the lowest common denominator level will destroy the future for any child who is forced to hobble along at that level. We are deliberately forcing our children to become mental cripples, all for the sake of some idealistic “multicultural” bullshit.

(5) You state “The backwards anti-science bias and even rewriting of history (less Jefferson in Texas books) that politicians force onto schools, we’re not justanti-evolution and anti-climate science, we’re even anti-metric.”

ALL of these problems would immediately disappear IF we had a strong, uniform system of education.

Needless to say, we must remove religion, or religious-based teaching from the school system.

(6) You state “We had great success with two generations of easier access to higher education: the GI Bill and the middle class wages of the GI Bill adults that schooled the next generation. Now in the face of growing competition, we shoudl be vigorously promoting competition to raise up new inventors, engineers and entrepeneurs, not raising barriers to schooling.”

TRUE!

And we as a nation are doing our level best to make sure that NEVER happens, mainly by refusing to face the reality of what the world has become.

Posted by EconCassandra | Report as abusive
 

I have made the same argument as my reply to Decatur several times before, but have NEVER received any response.

Is there ANYONE out there who understands what I am saying, or are you all so wrapped up in your elitist love affair that you cannot see she has warts, and is ugly as sin.

Or has our “educational system” finally succeeded in producing only people who are incapable of rationally realizing what the problems really are?

Posted by EconCassandra | Report as abusive
 

Thanks for lengthy reply.

I almost entirely agree with you Cassandra.

We underprioritize education and thus shortchange our future. Education is seen as a threat by some economic and religious fundamentalists who like the status quo, or maybe like the 19th century even better. We need the modern combined equivalent of GI Bill, Sputnik scare and greatest generation national focus to make sure that our kids are smart enough when they grow up to a world where each American has 10 or 20 educated peers, so they are looked to by the world for knowledge and solutions, so they ‘add value’ and can export ideas, expertise, continuing the tradition of ‘American know-how’.

We undercut educators (the teachers we hold responsible for our kids performance) by lumping them in as bad guys with the current anti-government rhetoric. This is where I disagree with you.

Education is being undercut by greed (not wanting to pay taxes for some kid who’s not in your family, but could someday be your doctor, the designer of your nursing home, or pilot the plane you fly in); and ideology where privatization is always better even when charter schools track records are their own can of worms, no panacea alternative to public schools. Yes, I wish we emphasized english more vs. multi-lingualism in education and in media and commerce, but we can get there faster by expanding english to get kids to where they are fluent and can go on to do their best in other topics – especially STEM. So I think funding ESL/ELL vs STEM vs band/art etc., in many State government debates are false choices – we need to give our kids’ brains all those areas of knowledge and experience.

I don’t work in education (I do volunteer some) but as a parent of kids going to magnet schools and a technical worker, I care a lot about the neglected condition of education and the imapct I fear it will have on our economy. Cutting education funding, or adding barriers like more expensive student loans, is a classic example of ‘being penny-wise and pound-foolish’, or taking far too short-term a view of the topic.

Posted by Decatur | Report as abusive
 

Thanks for the reply Cassandra.

I almost entirely agree.

We under-prioritize education and thus shortchange our future. Education is seen as a threat by some economic and religious fundamentalists who like the status quo, or maybe like the 19th century even better. We need the modern combined equivalent of GI Bill, Sputnik scare and greatest generation national focus to make sure that our kids are smart enough when they grow up to a world where each American has 10 or 20 educated peers, so they are looked to by the world for knowledge and solutions, so they ‘add value’ and can export ideas and expertise, continuing as best we can the tradition of ‘American know-how’.

We undercut educators (the teachers we hold responsible for our kids performance) by lumping them in as bad guys with the current anti-government rhetoric. This is where I disagree with you.

Education is being undercut by

1) greed (not wanting to pay taxes for some kid who’s not in your family, but could someday be your doctor, the designer of your nursing home, or pilot the plane you fly in);

2) ideology where privatization is always better even when charter schools track records are their own can of worms, no panacea alternative to public schools; and

3) local politics pandering to ignorance or ideology, re-trying the Scopes trial over and over at a county level.

Yes, I wish we emphasized English more vs. multi-lingualism in education and in media and commerce, but we can get there faster by expanding English teaching to get kids to where they are fluent, become ‘mainstream’ even if they started as immigrants, and can go on to do their best in other topics – especially STEM. So I think funding ESL/ELL vs STEM vs band/art etc., in many State government debates are false choices – we need to give our kids’ brains all those areas of knowledge and experience.

I don’t work in education (I do volunteer some) but as a parent of kids going to magnet schools and a technical worker, I care a lot about the neglected condition of education and the imapct I fear it will have on our economy. Cutting education funding, or adding barriers like more expensive student loans, is a classic example of ‘being penny-wise and pound-foolish’, and taking far too short-term a view of the topic. Eisenhower’s comparisons of society being shortchanged the cost of schools or hospitals vs. added squadrons of missiles or jet bombers are just as valid today as they were 50+ years ago. Back then it was argued to moderate defense build-up from growing at the cost of domestic needs, today it should be argued that gutting education is a cost we can’t afford for the sake of austerity, making it instead our priority to maintain the lowest tax levels in generations.

Posted by Decatur | Report as abusive
 

What a dishonest article. “The machinations of bureaucrats setting arbitrary rates?” “Price fixing?” Students should get loans at the same rates the Wall Street fat cats got from the Fed when they were bailed out, just as Senator Elizabeth Warren has suggested.

Posted by bluepanther | Report as abusive
 

I have a theory.
I believe the government with the help of wall street bankers have bundled up student loans like they once did mortgages and sold them on the market. These “junk bonds” are then used to service off our governments debt obligations abroad mainly to China.
Why? These loans are unforgivable which was different from the mortgage crises when many of the loans went into foreclosure and ultimately wall street had to write these loans off and as you know led to the financial meltdown of 2008-2009. Today, the student loans are more secure due to the unforgivable terms. Also, if the student loans go into default the government can seize your tax refund in the event you have one. Student load debt has been reported to be upwards of 1.1 trillion dollars. Student loan rates have risen and congress has yet to take action. I believe the rate is from 5% – 8% based on information gathered from the(Federal Student aid Dept.) which is twice the amount of the current national rate for non-secured debt ,reported by the Federal Housing Finance Agency (FHFA) of 3.35 percent based on loans closed in January. Lastly, debtors are for the most part young and the chances that they will find careers were they will be able to service their loans at some point in time is worth the wait. Its a catch-22 you can put it off, but if you do it will rear its head when applying for a mortgage or purchasing a car. Your rate will be higher or will not be approved all together. So you better pay that loan off. So given this conspiracy, what is the likely hood of student loan reform? None to little cosmetic changes. It already been bundled and sold!

Posted by DariusByRemote | Report as abusive
 

The federal loans are the best thing that happened to students. They don’t pay the whole cost, but carry a 6.8% FIXED interest rate. That means less from JPMorgan at 11%

The $2500 tuition tax credit was also the only way I had the minimal food budget I had in college. Dark days, they were. Federal loans are much, MUCH nicer to you in repayment as well

Posted by dustyred14 | Report as abusive
 

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