Don’t forget the other “public option” debate

posted at 11:30 am on January 16, 2010 by Ed Morrissey

With all of the attention in politics going to government takeovers and job losses, one issue that has elements of both remains mainly in the shadows despite an activist Congress pushing it hard.  And in this case, the bill working its way quietly through Capitol Hill offices is an explicit single-payer plan that essentially nationalizes a private-sector industry.  That sounds like health care, but actually is the Democratic Party’s attempt to seize the student-loan industry — which provides a model for how ObamaCare will eventually follow the same path.  Dana Perino wonders why this has not received the kind of attention it deserves:

While Americans were becoming increasingly disenchanted with the health care reform proposals passed by Democratic majorities in the House and Senate, another government takeover proposal was in the works. — This time the Democrats want the federal government to be in charge of student loans. …

Last fall, the Democrats passed legislation to create a “public option” for student loans and the next step in its passage is in the Senate. The only think that’s holding Democrats back from passing this legislation is the tricky business of trying to get the health care bill passed in time for the president to have a grand signing ceremony before his State of the Union address.

If you thought the public option — as it was proposed for health care was bad, get a load of this: the student loan legislation does not just set up a government-run option for student lending, the bill makes the government the only option! It promises to bring complete federalization of the student loan process to a private marketplace. Iowa Democrat Sen. Tom Harkin’s plan for the bill is to jam this single-payer student loan system through an unpopular process known as “reconciliation,” all the while ignoring any of the bipartisan alternatives that have been presented. — A truly odd decision coming off a contentious health care fight that’s left the majority of Americans with a bad taste in their mouths.

As with the shadowy and confusing language of the health care debate, you have to get past the rhetoric that sounds perfectly reasonable to figure out what is really going on. Their words reflect a desire to keep choice and competition in the student loan market. During his September health care address to Congress the president said: “My guiding principle is and always has been that consumers do better when there is choice and competition. That’s how the market works.” In a cable news interview last year, Harkin said: “The one thing, I think, the people understand that we have to have is, we have to have choice and competition.”

On that we may all be able to agree — but that’s not at all how their student loan bill works. It would not only eliminate all choice and competition in the student lending market, but it also would risk tens of thousands of private sector job losses — the last thing we need with double-digit unemployment.

Actually, we have had a “public option” in student loans for decades.  The student loan industry got its real start over 40 years ago, when Congress — in the midst of its Great Society expansion of federal government and jurisdiction — created incentives for lenders to offer large, unsecured loans to a traditionally high-risk set of borrowers: teen-agers.  Congress wanted to push more American students into college, and so they offered guarantees to lenders that allowed them to eliminate most of the risk in lending to college students, keeping interest rates relatively low.  This had the desired effect of greatly expanding this part of the lending industry, and a flood of new demand hit higher education.

This had unintended consequences, as all artificial interventions do.  First, the new demand forced prices of education to rise far beyond the cost of inflation.  This is quite similar to the effect Congressional action had on home values in the 1998-2007 period, when guarantees on subprime loans created a large flood of artificial demand.   This meant that lenders had to offer ever-increasing amounts of money to students for four-year education plans, which left them further in debt, and therefore forced students into narrow ranges of career choices in order to pay off their debt.  Defaults have always been a problem in the student loan program, which taxpayers end up eating thanks to the federal guarantees, but the cost and size of defaults rose.

Still, the government wasn’t satisfied with the breadth of loans offered or the candidate selection.  In 1993, Congress created the Direct Loan Program, one of the first bills signed by Bill Clinton as President, which skipped private lenders and guarantees in order to directly loan money to students.  The US spent billions of dollars on long-term loans, crowding out their former private-lender partners (at least at first), in order to make more politically palatable decisions on lending rather than using normal private-sector lending practices.  However, inefficiency and waste in the DL program resulted in cutbacks in its funding over the past 17 years, with 2008’s DLP budget being just over $500 million.

Democrats couldn’t sit still while their “public option” on student loans got outperformed by the market — which relied on the government guarantees designed to create the industry in the first place.  Now Democrats want to undermine the market they mainly created by ending guarantees for student loans, which would force almost all students into the Direct Loan Program.  Perino points out that this would destroy the private student-loan industry, which will not issue unsecured loans worth the value of some mortgages to students with no assets and no credit at all, especially not in this economy.

That industry employs about 35,000 people.  Some of those jobs would survive to work federal contracts in administering the DLP, although that’s no guarantee; the SEIU would like to get its hands on that work, certainly, as direct federal-government employees.  Most of those would disappear in either scenario, and in today’s credit market, they won’t get absorbed into other areas of the lending industry.

This is a perfect example of what the government will wind up doing to health care, either in the near term or somewhat down the road.  They intervene to promote a social agenda, and eventually decide that total government control is “more efficient” than the private sector.  We need to stop the nationalization of student loans, but more importantly, we need to learn the right lesson of what happens when we allow the federal government to compete with the private sector.  Eventually, the private sector gets eliminated, and we’re seeing that unfold in real time with student loans.

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Comments

The issue with student loans is they don’t single out what is useful to society and what isn’t. It’s one thing to provide loans so people could go to school and become teachers, social workers, nurses, doctors, etc. It’s another thing to go to provide loans so someone could get a degree in history from a fourth tier state school and put that degree to work making coffee at Starbucks.

Illinidiva on January 16, 2010 at 11:38 AM

Beware Governmental control of the industrial-educational complex. (sorry Ike…)

Bruno Strozek on January 16, 2010 at 11:39 AM

I had a long term student loan at only 3% interest so I wasn’t in any hurry to pay it off until I got sick of that being my only debt, so I dumped the loan finally, last year. In all these years, it morphed into a loan where I paid it back to the US Dept of Education. It was originally taken out as a private loan, never was defaulted or late, so I am not sure how it morphed into a direct payback to the feds. So over time, they have enroached into this induatry, anyway.

karenhasfreedom on January 16, 2010 at 11:39 AM

Now Democrats want to undermine the market they mainly created by ending guarantees for student loans, which would force almost all students into the Direct Loan Program.

I support the former, but not the latter.

If state’s want to provide these services, and in a way they do with public universities, go for it. Maybe provide state guaranteed loans for students will help attract people to the state. Maybe it won’t.

WashJeff on January 16, 2010 at 11:39 AM

As long as the private sector is involved liberals, using the power of government, can’t control “greedy capitalists” making “windfall” profits.

perroviejo on January 16, 2010 at 11:40 AM

Two things that people buy, and spend a lot of money on, because they’re afraid not to: medical treatment and higher education. Is it just a coincidence that government’s spotlight is on those two things right now?

RBMN on January 16, 2010 at 11:41 AM

The issue with student loans is they don’t single out what is useful to society and what isn’t.

Illinidiva on January 16, 2010 at 11:38 AM

First federal student loans shoud not exist, but they should not mould society. The feds do way too much of that. I hate how student loans discriminate against people that work with their hands. Why should my body & paint technicians at my family’s collision business subsidize people that want to go to college with their tax money? Just stupid!!!

WashJeff on January 16, 2010 at 11:42 AM

I agree that govt. take over of this needs to be stopped. The issue is a tough one for me as my fiance has quite a bit in student loans but couldn’t finish her degree and can’t hold down a job due to health problems. Meanwhile, she sees single parents getting their education and housing paid for while they mistreat their kids.

aikidoka on January 16, 2010 at 11:43 AM

I had direct loans in 2 trips to college and hated the damn things. They overpaid on them and I ended up probably paying on them an additional 3 years more than was necessary cuz they gave away money that I didn’t need at the time. Education is yet another industry govt intervention has ruined to 1 degree or another.

gsherin on January 16, 2010 at 11:43 AM

Beware Governmental control of the industrial-educational complex. (sorry Ike…)

Bruno Strozek on January 16, 2010 at 11:39 AM

In the Obamanation, only Leftists will get loans.

petefrt on January 16, 2010 at 11:45 AM

The media and democrat politicians have always known that people who tend to vote democrat are gullible enough to believe that “by putting the government in control” things will get better. Then they go get in that real long line between 8:00 AM and 5:00 PM M-F to get their license plates, failing to comprehend the irony.

perroviejo on January 16, 2010 at 11:45 AM

Libs own the “educated class”, this is just grasping at straws to maintain their hold on at least one traditionally democratic demographic, since even unions aren’t a safe bet for them anymore.

I hadn’t even heard of this prior to today– if ObamaCare fails, I wonder if they’ll even try to push this through.

RachDubya on January 16, 2010 at 11:47 AM

Is it just a coincidence that government’s spotlight is on those two things right now?

RBMN on January 16, 2010 at 11:41 AM

No. The left has always sought ways to get their hands on the money we earn and spend.

perroviejo on January 16, 2010 at 11:48 AM

The issue with student loans is they don’t single out what is useful to society and what isn’t. It’s one thing to provide loans so people could go to school and become teachers, social workers, nurses, doctors, etc. It’s another thing to go to provide loans so someone could get a degree in history from a fourth tier state school and put that degree to work making coffee at Starbucks.

Illinidiva on January 16, 2010 at 11:38 AM

Say what? So in your mind the Government should now be dictating what course of study one plans to take in order to qualify for any type of student loans? And dictate what level of school they can get into?

I’m sorry, but that sounds like a real road to disaster and socialism at its finest.

Knucklehead on January 16, 2010 at 11:48 AM

In the Obamanation, only Leftists will get loans.

petefrt on January 16, 2010 at 11:45 AM

That is the danger. God, when Government has this much power they can tell you what to think.

Holger on January 16, 2010 at 11:49 AM

A Brown endorsement from Teddy’s paper:

http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20100116/OPINION/1160337/-1/NEWSMAP

dtestard on January 16, 2010 at 11:50 AM

America will not go quietly into socialism….

d1carter on January 16, 2010 at 11:50 AM

Guaranteed government loans (guaranteed that the taxpayers will foot the bill when recipients don’t pay) also directly push college tuition rates higher. Universities are fully aware that these federal guarantees guarantee that they will definitely get paid. If more money is coming in, they are free to increase their tuition rates (and do so).

perroviejo on January 16, 2010 at 11:53 AM

I have been following this, with alarm, as I work in higher ed. Students now talk about doing it without loans because they see the bubble down the road that represents a burden they can’t shoulder.

I think Obama is doing this so he can enforce volunteerism for his projects and force students to sign up for PC majors as a condition of the loan.

It’s a way of funding his base, also, by supplying it with customers.

I truly fear these regulatory schemes that he is accomplishing much more than the overt programs. Who even noticed the problems of CRA when Clinton pumped it up?

PattyJ on January 16, 2010 at 11:55 AM

This is the industry that I am soon be unemployed from. Schools don’t appear to be thrilled with embracing the Direct Loan system but if it’s the only game in town what will they do. Also note that the “government” is talking about forgiving these loans if the borrower will work for five years in a prescribed job and the government. And to say that they lack desire in requiring borrowers pay back the money is an understatement even though student loans are exempt from bankruptcy pay offs. The disability claims departments are a work of fiction that is hard to imagine with millions being written off while the borrowers go on to be professional students on the taxpayer dime.

Cindy Munford on January 16, 2010 at 11:56 AM

I always thought this measure was really their way of ultimately funding a free college education for those who couldn’t pay. In other words, the government would loan the money, but then forgive the loan, something the private lenders couldn’t get away with.

TXUS on January 16, 2010 at 11:57 AM

WashJeff on January 16, 2010 at 11:42 AM

I don’t know if this is a state issue but the company I work for guarantees loans from many technical institutes for blue collar workers.

Cindy Munford on January 16, 2010 at 12:00 PM

Three years of service in OfA will be required to obtain student loans now.

Joe Caps on January 16, 2010 at 12:03 PM

Heck, why not go for “public option” mortgages while they are at it?

RhymesWithRight on January 16, 2010 at 12:07 PM

America will not go quietly into socialism….

d1carter on January 16, 2010 at 11:50 AM

Believe me the socialist will not go quietly ether.
When ObaMao is thrown out of office look for the cities to burn.

Ed Laskie on January 16, 2010 at 12:08 PM

I don’t know if this is a state issue but the company I work for guarantees loans from many technical institutes for blue collar workers.

Cindy Munford on January 16, 2010 at 12:00 PM

I do not know if states do guaranteed loans, but my is if they want to, there no federal constitutional issues stopping the states. I believe there is with the feds doing this.

If I could dictate state policy, I would turn all public schools private, including universities, and then offer all legal residents of the state “scholarships” for Preschool through 4 years of college\tech school. The scholarship amounts would vary in amount, obviously, depending on the year of schooling. Total school choice. Provide equality of opportunity regardless of income\wealth.

WashJeff on January 16, 2010 at 12:11 PM

They will decide later what you will learn and what job you must have. Everyone will be paid the same with ATM tokens, A chip in your hand will be your bank book. We will live in communes. A large mainframe computer will be in control of the economy, making all the decisions. This is their end game, final plan- NOT A JOKE- it is what they want to do.

Ed Laskie on January 16, 2010 at 12:13 PM

When ObaMao is thrown out of office look for the cities to burn.

Ed Laskie on January 16, 2010 at 12:08 PM

That may be a good thing for Detroit. ;-)

WashJeff on January 16, 2010 at 12:14 PM

Excellent post, Ed.

One further point that has been missed, but made here before:

Mark my words, Obama will use this program to demand that recipients of these loans meet their civic duty and perform “volunteer work” in “community service” and attend “boot camps” in return for the federal government’s now monopolized largess. This is all part of Rham Emanuel’s heinous agenda.

Buy Danish on January 16, 2010 at 12:16 PM

Downtown Detroit is nice, but housing areas are deadly.

Ed Laskie on January 16, 2010 at 12:16 PM

And in this case, the bill working its way quietly through Capitol Hill offices is an explicit single-payer plan that essentially nationalizes a private-sector industry.  That sounds like health care, but actually is the Democratic Party’s attempt to seize the student-loan industry

Putting the pieces togehter:
National Socialist Democratic Party

Chip on January 16, 2010 at 12:17 PM

Buy Danish on January 16, 2010 at 12:16 PM

Exactly its his method of taking control. Just like bailouts and taking government ownership of GM in stock.

Ed Laskie on January 16, 2010 at 12:20 PM

Allow me quote a bit from Obama’s Chief of Staff, Rahm Emanuel:

We need a real Patriot Act that brings out the patriot in all of us by establishing for the first time an ethic of universal citizen service. All Americans between the ages of 18 and 25 should be asked to serve their country by going through three months of basic civil defense training and community service. This is not a draft, nor is it military. Young people will be trained not as soldiers, but simply as citizens who understand their responsibilities in the event of a natural disaster, an epidemic or a terrorist attack. Universal citizen service will bring Americans of every background together to make America safer and more united in common purpose.

Buy Danish on January 16, 2010 at 12:22 PM

Downtown Detroit is nice, but housing areas are deadly.

Ed Laskie on January 16, 2010 at 12:16 PM

Some Michigan pol, and they may be part of the Obama admin now, wanted to plow the blighted houseing down and turn it back to green space. On the surface, I like the idea. The part it did not like, he want federal money to do it.

WashJeff on January 16, 2010 at 12:23 PM

Heck, why not go for “public option” mortgages while they are at it?

RhymesWithRight on January 16, 2010 at 12:07 PM

They have. The Federal Reserve balance sheet is stuffed with Mortgage Backed Securities.

cthulhu on January 16, 2010 at 12:23 PM

I know these people since the 60s and 70s, and their agenda has never be a secret. They say- ” Real Marxism really never has been tried, we could make it work, if only we get a chance.” They are getting their chance now.

Ed Laskie on January 16, 2010 at 12:25 PM

One more (he’s just like Lincoln, dontcha know!):

Universal College Access

We must make a college degree as universal as a high school diploma. More than ever, America’s success depends on what we can learn. We have an education system built in the last century, with a school year left over from the century before that. In this new era, college will be the greatest engine of opportunity for our society and our economy. Just as Abraham Lincoln gave land grants to endow our great public universities, we will give the states tuition grants to make college free for those willing to work, serve, and excel.

Serve=Serve the State. And I don’t mean the state of Georgia.

Buy Danish on January 16, 2010 at 12:26 PM

Ed Laskie

As the son of an Israeli (and a union activist mother), Emanuel has clearly been inspired by the Marxist model of the Israeli Kibbutz.

Buy Danish on January 16, 2010 at 12:31 PM

I know these people since the 60s and 70s, and their agenda has never be a secret. They say- ” Real Marxism really never has been tried, we could make it work, if only we get a chance.” They are getting their chance now.
Ed Laskie on January 16, 2010 at 12:25 PM

To a liberal, the past never matters, because “This time, we will get it right”.
MarkTheGreat on January 15, 2010 at 9:37 AM

That’s one of the best ways of saying that.

The past never matters to the Left, because “This time, we will get it right”.

Chip on January 16, 2010 at 12:32 PM

The issue with student loans is they don’t single out what is useful to society and what isn’t. It’s one thing to provide loans so people could go to school and become teachers, social workers, nurses, doctors, etc. It’s another thing to go to provide loans so someone could get a degree in history from a fourth tier state school and put that degree to work making coffee at Starbucks.

Illinidiva on January 16, 2010 at 11:38 AM

Bullseye. More blindly throwing money instead of specifically targeting what is needed, thus turning what could be a good thing into another boondoggle.

My mother has a good description of the BS courses offered at too many colleges: “Underwater basket-weaving”.

Dark-Star on January 16, 2010 at 12:39 PM

Dark-Star,

Beware the government deciding what is needed. I’m sure Obama would say we need more community organizers.

Disturb the Universe on January 16, 2010 at 12:47 PM

Beware the government deciding what is needed. I’m sure Obama would say we need more community organizers.

Disturb the Universe on January 16, 2010 at 12:47 PM

There is that aspect to deal with, sadly enough. Like any other power the government has, it can be used for good or bad. Perhaps we dare not give it that power if/until we get an administration and Congress with their heads on straight.

Still, it would be nice if there was a need-based system for loans. Sure might have helped alleviate the shortage of doctors and nurses we’re facing!

Dark-Star on January 16, 2010 at 12:52 PM

I had heard of this. My daughter is planning to go back to school. She had student loans from previous schooling but have paid them off.I told her she needs to get her rear is gear and start looking for loans and grants.

The government wants to control it all.

becki51758 on January 16, 2010 at 12:56 PM

Still, it would be nice if there was a need-based system for loans. Sure might have helped alleviate the shortage of doctors and nurses we’re facing!

Dark-Star on January 16, 2010 at 12:52 PM

States can provide funding for that if they choose…make medical school “free” to the students at state universities. Doctors that choose this “free” option must perform X years of service in that state. The federal government just needs to stay out (i.e., no lipstick on the pig).

WashJeff on January 16, 2010 at 12:57 PM

States can provide funding for that if they choose…make medical school “free” to the students at state universities. Doctors that choose this “free” option must perform X years of service in that state. The federal government just needs to stay out (i.e., no lipstick on the pig).

WashJeff on January 16, 2010 at 12:57 PM

That sounds like a pretty good system, IMO. All I’d ask for would be some way for the fed to give a little ‘nudge’ if the nation at large was facing a big enough need in a particular skill field. (not that they run the whole system, bad idea)

May I ask how many states choose to follow this route and to what degree?

Dark-Star on January 16, 2010 at 1:03 PM

May I ask how many states choose to follow this route and to what degree?

Dark-Star on January 16, 2010 at 1:03 PM

You may ask ;-), but I have no answer if any states do. I would be curious to know myself if any states do this. Nice if there was a doctor in the house thread to answer that question.

I am not too big on Fed nudging since opens te door to more expansive intrusion (not that the door is kicked down already).

WashJeff on January 16, 2010 at 1:21 PM

Are they simply repealing the federal backing of student loans, or are they doing other things as well?

If they are just repealing the backing, I doubt they will be able to soak up all of the dropped loans into their Direct Lending Program, given how much of a disaster the program has been. It seems more likely to me that it will pop the education bubble, with potentially interesting* results. Additional effects will depend heavily on what else this bill does.

Voyager

*In the form of the curse “may you live in interesting times.”

Voyager on January 16, 2010 at 1:23 PM

Well to give you a view from someone that used to be inside the student loan industry we actually got hit by a perfect storm. Originally we were supposed to have the new student loan laws done over the summer of 2008 and get a final vote around September. So unfortunately Kennedy was the guy that used to push this stuff through congress since it was one of his things. Since he was sick he wasn’t able to do that and really nobody stepped up so that stuff languished. So then it was election season and nobody want to touch that at all since we were going to have a new president and all so that made it languish another few months. Finally Barry wins so you’d think “Oh he’ll do it at the start of his term and all.” So lets play a game, guess what the other thing the commitee that does student loans also does? Yup, healthcare and the reform pushed it back indefinitely. Then on top of that Barry announces the government wants to get rid of private loan. So basically we were supposed to have a law back in Summer 2008(and that was a realistic date) and it looks like at the soonest it’ll be Summer 2010. Yes, they laid off around 15-20% of the staff because of all of this already.

Dave_d on January 16, 2010 at 1:33 PM

It gets worse. These high-cost colleges no longer promise that you’ll be out in four years. Five and six years are now the norm for an undergraduate degree. An extra year adds about 25% to your repayment costs — and, two years, about 50%.

They know they’ve got you.

unclesmrgol on January 16, 2010 at 1:48 PM

I know these people since the 60s and 70s, and their agenda has never be a secret. They say- ” Real Marxism really never has been tried, we could make it work, if only we get a chance.” They are getting their chance now.

Ed Laskie on January 16, 2010 at 12:25 PM

Exactly like their forebears. Doomed to repeat it.

unclesmrgol on January 16, 2010 at 1:50 PM

It gets worse. These high-cost colleges no longer promise that you’ll be out in four years. Five and six years are now the norm for an undergraduate degree. An extra year adds about 25% to your repayment costs — and, two years, about 50%.

They know they’ve got you.

unclesmrgol on January 16, 2010 at 1:48 PM

I work for a state college and we do everything we can to make sure they get out on time (4 yrs), even when it is the student who has screwed up. I didn’t know any college would try to keep them longer. Parents of our students get really upset if they have to take even another semester so we try to work something out.

scalleywag on January 16, 2010 at 2:07 PM

It saddens me to think that in my lifetime I’m never going to see a move towards smaller government. It’s only going to get bigger and bigger until it controls everything we buy, eat, smoke, drink, live in, learn at, drive, commute in…

scalleywag on January 16, 2010 at 2:12 PM

The student loan cartel has succeeded in devaluing the worth of a college degree, allowing tuition to skyrocket, and saddled an entire generation of students with untenable debt, who sign on the dotted line for college’s that don’t care what they use it for, so long as they sign those loan papers. Make student loans dischargeable in bankruptcy, and the whole house of cards would come tumbling down.

brak on January 16, 2010 at 2:33 PM

Both of my student loans are federal loans. So I’m not sure how this actually impact me.

Except, given the government we have now, I’m sure that somehow, I’d actually wind up having to pay more money.

Vyce on January 16, 2010 at 2:51 PM

College “education” is such a disgusting racket I could vomit.

lansing quaker on January 16, 2010 at 3:06 PM

This had unintended consequences, as all artificial interventions do. First, the new demand forced prices of education to rise far beyond the cost of inflation.

Exactly, government supplies of our money creates the demand for “obscenely” paid professors (for part time work) and free edu. for the politically correct, while the politically un-correct pay even more (obscene costs).
This isn’t the other public option, its the proof that single payer, sucks.

Speakup on January 16, 2010 at 3:11 PM

In the 1920s the cost of a year’s tuition for a private college was about 3 months worth of the average US income. Today the cost of attending a private college is a year’s worth of the average income.

As with everything else, as soon as the govt got involved, it make the whole system more expensive and less efficient.

angryed on January 16, 2010 at 3:12 PM

I work for a state college and we do everything we can to make sure they get out on time (4 yrs), even when it is the student who has screwed up. I didn’t know any college would try to keep them longer. Parents of our students get really upset if they have to take even another semester so we try to work something out.

scalleywag on January 16, 2010 at 2:07 PM

My niece is at Cal Poly. She’s due out in 5, and it sure ain’t her fault, and, according to her, not her advisor’s either — she’s nearly a 4.0. Her major, veterinary medicine, is the problem — they don’t have the resources to give her the classes she needs in her major when she needs them.

unclesmrgol on January 16, 2010 at 3:17 PM

As with everything else, as soon as the govt got involved, it make the whole system more expensive and less efficient.

angryed on January 16, 2010 at 3:12 PM

Not less efficient. Just more expensive. The government money font fed an explosion of salaries, and the way in which the colleges maximized their ingest from the font was to raise tuitions, student fees, housing costs,….

The data is still transferred one semester or quarter at a time, and it hasn’t improved in quality one wit.

unclesmrgol on January 16, 2010 at 3:27 PM

Believe me the socialist will not go quietly ether.
When ObaMao is thrown out of office look for the cities to burn.

Ed Laskie on January 16, 2010 at 12:08 PM

Let them burn.

I can think of a few cities that need to be burnt to rubble and ash… not one brick standing on top of another. Chicago topping the list, with DC shortly after that.

Chaz706 on January 16, 2010 at 4:02 PM

Hope and Change = Bread and Circus

Mojave Mark on January 16, 2010 at 4:15 PM

“This meant that lenders had to offer ever-increasing amounts of money to students for four-year education plans, which left them further in debt, and therefore forced students into narrow ranges of career choices in order to pay off their debt.”

This point cannot be emphasized enough. The gov’t is the predatory lender of student loans!
I would only add that because the schools do not have to worry about consumers demanding a better product for their hard earned money (when you can charge it with easy-to-get credit, you’re not as picky because you did not have to work years and years to save up and pay for it out of pocket)… this causes quality of the education to actually go down while the price skyrockets!

Add that together with the fact that it is practically impossible to get out of paying a federally guaranteed student loan, unless you die… no really, you literally have to die or be permanentaly disabled in order to get out of paying a fed student loan.

Bankruptcy will not get rid of a fed student loan. And a defaulted student loan can stay on your credit report INDEFINITELY and destroys your credit scores. You cannot get an FHA or VA mortgage loan if you have a defaulted federal student loan and you cannot be hired for certain jobs with defaulted student loans… more than any other lender, the fed gov’t can make your life a living hell if you default.

(In case you are wondering, the answer is “no, I do not nor have I ever had a defaulted student loan”, so this is not some bitter rant from someone with too many student loans.)

The point is, when Obama floats the idea that people should be able to “serve” the gov’t for 10 years and in exchange the gov’t will “forgive” their student loans, it should chill every one of us to the bone.

As he knows, this will lead to an army of gov’t bureaucrats who will not go back into the private workforce after 10 cushy years of working for the gov’t. It is a perfect way to recruit his desired “civilian security force, just as powerful and just as well-funded as the military”.

And how will the private sector be able to compete for those workers when the gov’t is offering much higher pay, better benefits, forgiveness of tens of thousands of dollars in student loans and a generous retirement plan at an early age?? Answer: they won’t. They will look for workers overseas who are only too happy to have our jobs for lower pay and less benefits… which will leave non-gov’t workers dependent on the gov’t for entitlement programs… and the vicious cycle continues.

It is a truly evil, anti-capitalist, pro-marxist plan and many young overly-indebted students are not going to be able to resist this devil’s offer.

Talk about creating indentured servants and killing the golden goose in one felt swoop! You could hardly come up with a better plan to destroy America.

painesright on January 16, 2010 at 5:36 PM

This had unintended consequences, as all artificial interventions do. First, the new demand forced prices of education…

Second, the unfortunate realization that courses had to be dumbed-down in order for the new influx of students to not end up as massive failure rates in college documentation because, amazingly, it turns out that not everyone should go to college and, also amazingly, keeping it pricey and serious and having to struggle to get in keeps the pool self-managed. It also keeps a high school diploma somewhat valuable. Which leads us to the third thing- creating a current system that demands even Starbucks employees (to cite an earlier post’s example) possess a college degree to even be considered for an interview.

rogerb on January 16, 2010 at 8:04 PM

They intervene to promote a social agenda, and eventually decide that total government control is “more efficient” than the private sector.

Yes, that’s the change 0bowma intended but neglected to inform his trusty followers.

It is more insidious than what your piece offers Ed. The rest of the plan, is to offer employment to students indentured under the weight of huge debt with a promise to eliminate the debt after ten years of service.

It may not be cradle to grave but it’s at least cradle to age 33.

FireBlogger on January 16, 2010 at 8:22 PM

The so-called single payer is always the tax payer.

Dhuka on January 16, 2010 at 9:17 PM

Great post. Made me think:

We see many big insurance corporations willing to make peace with this health care socialization. Basically, corporations for corporatism.

So if you nationalize the loans and that is the payment conduit, then will we here any howls from the major universities? Many will be fine with that, I fear.

AshleyTKing on January 16, 2010 at 11:04 PM

We need to stop the nationalization of student loans, but more importantly, we need to learn the right lesson of what happens when we allow the federal government to compete with the private sector.

…all the while ignoring any of the bipartisan alternatives that have been presented…

This is where Republicans get distracted with the “Democrat light” strategy. The public needs reminded and educated about what actually makes good government. It is not enough to argue lower taxes or more jobs while our foundation is being torn apart before our eyes.
Yes, we need low taxes. Yes, people need jobs! Yes, but if that is all your running on then you are only explaining what you’ll “do differently” than the other guy.

For some people, maybe that’s enough. But what if your opponent is a communist dictator who can promise everyone a good paying job and low taxes?
Actually stepping out a little further and defending the need for smaller government, defending our founding principles of individual liberty and the inherent risks, abusiveness and corruption of big governments actually tells people who you are, not just what you’ll do! It means standing on a belief. A principle. And that is just too close to “religious” for some Republicans.

JellyToast on January 17, 2010 at 8:47 AM

I work for a state college and we do everything we can to make sure they get out on time (4 yrs), even when it is the student who has screwed up. I didn’t know any college would try to keep them longer. Parents of our students get really upset if they have to take even another semester so we try to work something out.

scalleywag on January 16, 2010 at 2:07 PM

LA Times story which illustrates my point:

For the current term, 500 students are enrolled in Professor Apostolos Athanassakis’ classics course, filling the lecture hall to capacity. And 300 others have tried, mostly unsuccessfully, to land a spot on the roster, he said.

Recent state funding cuts have translated to reductions in undergraduate course offerings across the beachside campus, sending students scurrying for classes such as Athanassakis’ that fulfill various requirements.

Translation: UC Santa Barbara needs state aid to fill a class for which 300 extra students are clamoring to attend, and 500 are already enrolled. Seems there’s something really wrong here — that class ought to more than pay for the lecture hall and the professor’s salary….

Marcus Rochellle, a Santa Barbara sophomore, said he’s only been able to sign up for three classes this term. So he has tried to crash several others, showing up unregistered in hopes of snagging a seat. But he is reluctant to buy books for those courses, and he fears he is falling behind.

“If the rest of my years here look like this, there’s no way I can graduate in four years,” said the political science major from Happy Valley, Calif. “I’m really hoping not to go into a fifth year because that will be an extra 10 grand I don’t have.”

He says it all.

unclesmrgol on January 20, 2010 at 11:35 AM