One question I have to ask during that budget review process is whether they have any outstanding loans or debts. A common answer is something like, “Just student loans but I’m not paying on them.” Maybe President Obama knows about this problem and that is why he is thinking of nationalizing the student loan program.
Here is a quote from the published text of Wednesday evening’s State of the Union Address:
When we renew the Elementary and Secondary Education Act, we will work with Congress to expand these reforms to all fifty states. Still, in this economy, a high school diploma no longer guarantees a good job. I urge the Senate to follow the House and pass a bill that will revitalize our community colleges, which are a career pathway to the children of so many working families.I want to comment on several phrases and sentences in these two paragraphs that bother me a lot because I believe they ignore reality and show disrespect for important American concepts of personal responsibility and free enterprise.
To make college more affordable, this bill will finally end the unwarranted taxpayer-subsidies that go to banks for student loans. Instead, let's take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let's tell another one million students that when they graduate, they will be required to pay only ten percent of their income on student loans, and all of their debt will be forgiven after twenty years - and forgiven after ten years if they choose a career in public service. Because in the United States of America, no one should go broke because they chose to go to college. And it's time for colleges and universities to get serious about cutting their own costs - because they too have a responsibility to help solve this problem. – President Barack Obama
“In this economy, a high school diploma no longer guarantees a good job.”
First, scratch “economy” and insert “country” because high school diplomas have not been qualification for much more than entry level fast food jobs for at least a couple of decades. Then, scratch “no longer” because no kind of diploma ever “guaranteed” anything. There was a time when a high school diploma enabled a person with some initiative and energy to get a good job that would support a family, but even college degrees never guaranteed anything beyond opportunity and, I hope, never will.
“…revitalize our community colleges.”
How about just revitalizing the high schools so that community colleges do not have to teach remedial stuff that should have been learned in high school? How about a requirement for high school graduation that the student be able to calculate the monthly payment on a $20,000 student loan at 5% interest and go to the internet to research typical salaries for the kinds of positions for which he or she might be seeking qualification and prepare a budget that would cover living costs and loan repayment?
What the heck is a “working family?” Surely the president would include single moms who spend their time “working” at home to raise families in free public housing with food stamps and a little child support? Is he trying to exclude families in which only one parent “works” and the other takes care of the kids? Is there a proposal to lift some restrictions on child labor so that entire families can work? I just don’t know for sure what a “working family” is but I guess it may be some code language designed to attract union votes and support.
“unwarranted taxpayer subsidies”
A lot of banks and bank employees are involved in student loans so it sounds like his proposal is to nationalize that program and let government employees replace the bank employees. Maybe there are already enough government employees to take on the additional work, but I bet not. They would probably still contract with the banks to manage the paperwork. If the money earned by a bank and its non-union employees in making and managing student loans is an “unwarranted taxpayer subsidy,” it just makes me wonder if the money earned by a construction company and its union employees, for example, with a government contract is considered an “unwarranted taxpayer subsidy” to eventually be eliminated by nationalization of the construction industry.
“And let's tell another one million students that when they graduate, they will be required to pay only ten percent of their income on student loans”
I’m not sure what the background is or who the first million students who got this message are, but do students have no responsibility for making sure that their educational expenses make some sense in view of their job goals and likely earnings and for paying back money they borrow. Is this a reasonable and responsible message to give high school graduates? If a student accumulates thousands in student loans and then fails to graduate and works minimum wage jobs, is there no accountability? And who are these new million students who will get this wonderful message and how will they be selected?
“and all of their debt will be forgiven after twenty years”
What could the logic behind this statement possibly be? Talk about an incentive for foot dragging and late payments. Is the idea that recipients of such deals will bust a gut for twenty years to pay off as much as possible of their loans so that the amount to be forgiven will be as small as possible? I know about the Old Testament concept of Jubilee, but that was every fifty years and did not apply just to student loans. That would have to apply to any money owed to the IRS also.
“and forgiven after ten years if they choose a career in public service.”
Who is deciding what is and is not public service? It seems to me that a fast food employee would be the epitome of public service…slaving away all day in that greasy atmosphere cooking and preparing food for hungry people. And what about physicians who relieve suffering and prolong life? Would that not be considered public service? What about the person who works at Lowe’s or Home Depot and helps people get the tools and materials that enable them to keep their homes in good shape? Is that not public service? What about people who work for the Red Cross and do disaster relief? I’m not sure what the president has in mind but suspect it has something to do with government employment.
I think the military has customarily paid college expenses in return for a commitment to serve a certain number of years in the military and I think that makes good sense. Telling somebody to borrow their college money and that if they can drag out their loan for ten years in some “public service” job, whatever remains at that point will be forgiven is absolute nonsense.
“no one should go broke because they chose to go to college.”
People may choose to go to college and later go broke, but this is not a cause and effect relationship. Over borrowing and going broke often is a cause and effect relationship. I guess this is a take-off on the mantra that nobody should go broke in America because they get sick. How about if somebody borrows money to start a business and hire employees? Should they go broke. How about if somebody borrows too much on a variable rate mortgage to buy an overpriced home? Should they go broke? Probably we can all agree that nobody should go broke, but if a person makes an unwise decision to borrow lots of money to go to college without some clear and realistic career objective that will enable them to earn a reasonable living and still pay back the loans, they should go broke.
Unfortunately many citizens are suffering financially now from such government supported baloneous assaults as, “Everybody should own their home. Get yours now for nothing down,” and “Everybody should get a college degree. Let us loan you the money to pay for it.”
“And it's time for colleges and universities to get serious about cutting their own costs”
I believe that government funding in the form of loans and grants is a major driver in increasing the prices of college educations and if all these proposals by the president become reality, we can expect a resulting boost in tuition and fees at colleges and universities because demand will be up and available funds will be up. More money chasing goods and services always results in higher prices. Infusion of government money also explains much of the excalation in health care costs. Maybe all that money going to the colleges and universities and the folks who work there could be considered “unwarranted taxpayer subsidies” and could be eliminated if the colleges were nationalized and run by the government. Certainly there has been a lot of interest in doing that with health care.
Wait a minute. The high schools are already government operated, and they aren’t working any more according to the president, so maybe nationalization is not a good idea.
Let me be clear. Make no mistake. The president’s focus is on government as the solution to our social and economic problems with an occasional conciliatory nod to personal responsibility and free enterprise. Or maybe he really does believe in personal responsibility and free enterprise and is just tossing some bones to those who have an opposing philosophy. How would we know?