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When it comes to President Obama's accomplishments, I tend to think one of the more overlooked breakthroughs was reform of the student-loan system -- an effort that was decades in the making, but had been blocked by Republicans and bank lobbyists until 2010.
Under the old system, the student-loan industry received billions in taxpayer subsidies to provide a service the government could perform for less. As Rachel explained on the show last night, in 2010, Democrats removed the middleman, streamlined the process, saved taxpayers a ton of money, and helped more young people get college degrees.
Republicans have condemned the move, usually for ideological reasons (they tend to call it a "government takeover" of the student-loan system). Yesterday, however, the Romney campaign tried to make a practical argument about the more efficient system.
[College Republican National Committee Chairman Alex Schriver] suggested the reason tuition costs are going up is because "this president decided to take over the student loan market."
Think about that for a moment. Schriver, acting in his capacity as an official surrogate of Mitt Romney's presidential campaign, argued on the record to reporters that tuition costs are higher because the government is no longer paying banks billions of tax dollars to serve as needless middlemen in the student-loan system.
Does anyone, anywhere, seriously believe this argument makes any sense at all? Either way, it suggests Romney, if elected, intends to bring back the old system and undo the cost-saving 2010 reforms.
That is, if Republicans don't scrap the federal student-loan program altogether.
Greg Sargent flagged this remarkable quote from Rep. Todd Akin (R), who's currently running for the U.S. Senate in Missouri.
Akin said the government should be out of the student loan market altogether. "America has got the equivalent of the stage three cancer of socialism because the federal government is tampering in all kinds of stuff it has no business tampering in," he said.
The GOP's presumptive presidential candidate, meanwhile, believes students who get accepted to college but can't afford the tuition should simply "shop around" to find some cheaper college -- because a Romney administration has no intention of helping that student afford the costs.
It's against this backdrop that Republican lawmakers are prepared to let student loan interest rates double. And the GOP wonders why it struggles with younger voters.
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These Republican primaries are laughable, since it is only the rich picking their preferred candidate. There is absolutely nothing democratic about these primaries and deeply shows how totally rigged it was. No one had a real choice and/or vote on this fiasco of what they call the Republican primaries. Does the Republicans actually think they are fooling people? It is seen too how much the Republicans do like the idea of Communism and/or Dictatorships too as it can be seen in these primaries and in certain States. What a joke and a scam, just more proof of how corrupt the GOP/Republicans are. The Republicans will use any excuse to gain power and all based on lies.
I would love to earn 3 plus percent return on my money. That is nearly triple what banks pay on savings. Since some banks are slow repaying TARP perhaps they can be strongly encouraged to guarantee the student loans at a discounted rate in return for forgiveness of some of their debt.
Federal Reserve actions dwarf TARP
No. The TARP loans have nearly all been repaid, with most of the participating banks already paid off, in full. The taxpayers will probably make a profit on the TARP program. It's the secret Federal Reserve actions which you need to learn more about.
Actually I heard a report on NPR (Morning Edition) that the smaller banks are having trouble paying back the TARP funds. They don't have the resources the larger banks have.
As to student loans I just got a flyer from my credit Union (Cal-Tech EFCU) :
"Rates based on a combination of credit history, GPA, course of study, school, class standing and year of study. Good grades could get you a better rate!"...
"Easy repayment plans. Build credit and keep the loan balance low by making small, regular payments. While in school, the student borrower can choose to:
1. Make interest-only payment each month OR...
2.Make a nominal payment of as little as $25 each month."
Now that's how it should be done!
The GOP don't really believe in an "educated public" hence the push to "privatize" schools, defund college and disenfranchise the people! This isn't rocket science, "thoughtful, intelligent, inquisitive thinking people" ask questions, they are not prone to just follow along like sheep/cattle being led by "their leaders" to slaughter. The GOP base, while many may be "educated" not only have no common sense, but can't see the forest for the trees! Let's face it Americans have been severely dumbed down on the functions of government and what its there for. Civics and civic participation are no longer required or needed by our legislators! WE the PEOPLE are to assume that our "freedoms & liberty" are all that we need and require to make it in this "survival of the fittest" mentality!
Just think about it, WE the PEOPLE, are fighting over the "crumbs", meanwhile the fat-cats and the legislators that their money has bought are gaining an ever larger share of the pie - all on the backs of WE the PEOPLE in the name of "Freedom & Liberty" - now do you see what's going on?
"Does anyone, anywhere, seriously believe this argument makes any sense at all?"
Steve, to the kool-aid drinkers and uninformed, the answer is, sadly, YES. LIES repeated often enough are believed, and that's standard GOP MO. Why do you even ask this question? The response should be:
When will Dems (or anyone) call out this BS for what it is?
Bank owners are paying 0% on trillions of dollars of taxpayer-backed risky loans, while students are already paying almost 4%, last I heard. The 1% are strip mining America's future.
What if America undertook a project to raise the global IQ, by working to fix the nutritional and other problems which deprive children of their IQ birthright?
book: Why is the IQ of Ashkenazi Jews so High? by Hank Pellissier
Raising the World's IQ: The secret is in the salt.
The Republicans will do ANYTHING to give money to their buddies...ANYTHING. Good Americans and patriots all...just ask 'em.
One way to look at how deficits are projected is to look at current law. Current law calls for a doubling in interest rates for these loans, thus increasing revenue and reducing the deficit. If we keep the rate, the deficit projected increases. What's wrong in offsetting the loss of revenue by finding savings elsewhere? Certainly with a budget over a trillion dollars we can find savings somewhere. Start with defense. It's called budgeting sensibility.
This was called the Buffet Rule which would have offset the cost of the student loan rates. But people were against the Buffet Rule and it was voted down.
Obama and Romney are steering everyone here away from the actual issue of the rate increase:
When this reform was signed in 2010, it savings was boasted over 10 years. It's 2012 - that's 2 years into the 10. Which means, if you don't raise the rates, then the Obama admin will be short on its funding for Obamacare.
http://money.cnn.com/2010/03/18/news/economy/student_loans/ - it was supposed to save $61 billion, with $10 billion going to fund obamacare. If you change it now, then Obama now has an unfunded mandate. maybe his answer is to cut medicare spending, so that medicaid has to pick up the tab.
On another note, interest rates should go up, so that students won't take out as many loans. This would mean colleges actually would have to curtail costs, not just pass them along to a consumer who can get 100% financing 100% of the time.
raising interest rates won't stop kids from taking out loans, it will only make it harder to pay them back. From a policy standpoint this is a no brainer. Figuring out how to pay for it is congress' job (which they don't want to do). Thus the need for the president to take the issue to the american people.
If people actually want to put pressure on colleges to lower tuition, they can do it by pumping money into community colleges, but something tells me that's not in the GOP's playbook
While it may be true that students will take out fewer loans, it will be because they've decided that they can't afford to go to college and aren't taking out any loans at all. That kind of defeats the whole purpose of the program, to enable kids who otherwise can't afford it to get a decent education.
And what is "boasted over 10 years" supposed to mean? And why would not raising the interest rates somehow impact the funding for Obamacare? If that were true, then raising the interest rates would be responsible for bringing in extra funds, not keeping the rates low. Your math doesn't add up.
@dkm - reforming the loan program generated $60 Bn in "savings". This pie was divided up between the pell grant, obama care funding (remember, the reform was a part of the healthcare reform law), and the "budget deficit".
So, the revenue generated from servicing loans is revenue for the gov't - non tax, non fee revenue. If you decrease the revenue, then you have a shortfall. I don't see them putting the shortfall to the pell grant, so i assume it would hit affect the obamacare law, which is not yet in full effect.
Also, college costs go up because people will pay what they ask, because they can get financing.
Not everyone should be paying out the wazoo for college. go to a smaller school, work, maybe learn a trade.
A college degree is only beneficial if it will pay for itself, wouldn't you agree?
You are confused Trust. The issue they are debating here is not the amendment to which you linked in your article. Sighs I'm getting so sick of this crap. What they are talking about- regarding student loan rates- has to do w/ a bill that was passed in 2007.
The measure to which you're referring- the savings amendment that was passed as part of ACA- is unaffected by the bill that this thread is discussing. The measure passed in ACA was passed assuming the student loan rate stayed the same. The estimates predicting the savings gained were also calculated on the assumption that rates would stay the same.
The Bennett Hypothesis is not the only reason or argument presented out there regarding tuition costs. Not all economists agree that there is an education bubble or that loans directly contribute to the problem. You are being entirely disingenuous by proposing that the Bennett Hypothesis is a. fact and b. an issue that all economists agree on. It is neither.
College costs are going up for a multitude of reasons (in summary of the other, far more compelling arguments (given data available)):
1- More students are attending college (as a total number) than 30 years ago, but more students (as a percentage of those attending college) are dropping out per year than 30 years ago. What this causes is a situation where a student is going to school, accruing 1-2 years worth of college debt, but is not graduating w/ the degree necessary to increase their income. Thus they are still being saddled w/ the same debt, but are not making higher revenues. Because they are not making more money they then aren't able to pay their loans back in a timely fashion OR are unable to pay their loans back at all. This then causes universities and colleges to push the burden on to other students by raising rates.
To use an analogy it's similar to the healthcare situation. When uninsured people- in particular poor uninsured people- go to the hospital to get treated for an illness this then causes the hospital to raise the cost of treatment. That's because the uninsured person either will not be able to pay the hospital back in a timely fashion OR will be unable to pay the hospital back at all. So the hospital is forced to spread the cost around to make up for the loss in revenue from the uninsured. This, then in turn, contributes to your monthly insurance rates increasing.
2- The amount of entry level jobs that require little to no expertise is decreasing as opposed to increasing. This then causes a situation where college graduates have to apply for delays on their loans because they cannot pay it back in time. Most students now have to graduate and take 2-3 internships before they can finally land an entry level position in their degree field.
3- The amount of subsidies coming from, in particular, states has dramatically decreased in the last 30 years to colleges and universities. The federal government has also scaled back on assistance given directly to colleges and universities, although the federal government's effect is somewhat less direct.
4- Loan caps. Because the federal government will only pay a small portion of a student's total tuition cost- usually around 1/3 or less- this then means that the student still has 2/3's he/she has to pay for. Since most states have either dramatically reduced the amount of student assistance they will give or have stopped student assistance entirely this then requires students to search for other means of paying for college. This increases the likelihood that the student will default on his/her loan.
5- Salary stagnation. Over the past 30 years the relative net worth of the American family has gone down along w/ the relative earning power of the American family. This means that we have Americans graduating w/ the same degrees, but they aren't getting jobs paying higher salaries.
There are other reasons, but these are some of the bulkheads.
Whether someone goes to a trade school, a community college, a specific license school such as flight school, or a traditional 4 year university this person will still be applying for federal student loans. If the Bennett Hypothesis is to be believed then this would mean that the only way a person reduces the cost of tuition is to either a. not attend school or b. not take out a federal or state loan to attend school (because somehow magically the private sector loans have no effect, even though they are just as artificial to the market).
I should also point out that if the Bennett Hypothesis is true this would also mean that the rate of tuition at entirely government ran facilities- such as the military academies- would be going through the roof. Yet this is also not true.
Truthfully, I've never heard of the Bartlett amendment, but I will now go get my google on.
And, it looks as though we are discussing the 2010 changes, not the 2007 changes. It mentions it twice in the article; my point, though, is that the rates should rise because that's what Obama sold when he sold Obamacare.
Also, if only we could decouple the notion that a person “fails” in some perspective if they have to extend out their college, or go to a smaller school, etc.
To me, that’s the societal pressure here – you fail if you don’t complete college, if you don’t go to college, or if you can’t get a job to pay back the loans after college.
I’m waiting for that item to become center stage, education is the main driver of most peoples’ self worth.
Bartlett amendment???!!! Are you talking about The West Wing? Because then you're in another reality Trust. That was a TV show starring Martin Sheen
http://www.imdb.com/title/tt0200276/
That show left the airwaves in 2006. That would be during the Bush administration in this reality. Nothing to do with "Obamacare". I think you need to do more than google I think you need to read an actual book.
" the reason tuition costs are going up is because "this president decided to take over the student loan market.""
I suppose that the rapidly escalating tuition costs going back quite a few years prior to the "take over" were because the colleges and universities knew that Obama, who was a high school student at the time, would be elected and would eventually get around to making student loans less onerous on the borrowers.
People keep saying that we shouldn't call the right wing stupid, but what else can you say about a statement like Schriver's?
Dems should use Romney's statements as a wedge. The Republicans have endorsed Romney and if they don't believe in his positions, then why should the voters.
The Republicans seem to be united on one thing: they definitely do not like legislation that is popular with PEOPLE: if everyone likes it, it means no small group is making gigantic profits from it.
That's why they have almost universally turned their offices over to unelected governments like ALEC to legislate -- i.e., they can just sit back and collect their fat salaries and benefits while ALEC and its ilk do all the work -- while they also go about wrecking any popular, democratically created laws (e.g. ALEC has announced it will now go after the laws to ensure states buy clean energy first).
They are the original LAZY politicians and they are happy to give up democracy if they can get rich in the process.