Obama’s politically-motivated plan to help college students repay their loans

posted at 3:25 pm on October 25, 2011 by Tina Korbe

At the same time that the Obama campaign has doubled down in its efforts to woo millennials, the president himself has made a point to pander to loan-burdened college graduates. He first announced his plans to help students pay off their loans as a part of his budget proposals — but, in the furor of the Occupy Wall Street protests, he’s seen fit to promote them more intentionally.

Right now, graduates enrolled in the federal government’s student loan Income-Based Repayment Plan make monthly payments of 15 percent of their discretionary income — and all debt is forgiven after 25 years. Congress has already passed a law to change that program to require students to make payments of just 10 percent of their monthly discretionary income — and to forgive the loan after just 20 years. That law will take effect in 2014 — unless Obama has his way. The president would like to promote the start date to 2012. Hmm. What else happens in 2012? (Incidentally, the law is somewhat problematic in the first place. The more debt the federal government has to “forgive” students, the more money taxpayers never see back.)

The president also wants to allow students with both direct loans and federally backed private loans to consolidate the two into a direct loan with a low interest rate. If you’ll recall, the federal government completely took over the student loan industry to help pay for Obamacare — but, prior to that takeover, the federal government backed private student loans. So, the president’s consolidation program would apply only to those students whose loan packages were crafted before Obamacare. Going forward, no students will have federally backed private loans to consolidate into direct loans anyway. It’s clear to see that this proposal would, in fact, make it easier for students to pay off their loans (although I think the student loan takeover moved the business of student loans in the wrong direction in the first place) — but the president appears to think he can implement the change independent of Congress. That’s yet another troubling tally in Obama’s column of “legislating through the executive branch.”

No doubt the president really does want to help students repay their college loans — in return for a vote. It hurts to be this cynical, but the timing and sudden urgency of so many of the president’s recent proposals raises the possibility that the president is politicizing again and again.


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Why now?

It’s the last demographic that Barry still has a chance with.

portlandon on October 25, 2011 at 3:28 PM

Using other people´s money again.
He sure is good at this!

gullxn on October 25, 2011 at 3:32 PM

Not all students are so blind.

publiuspen on October 25, 2011 at 3:32 PM

By this time next year PBHO will be handing out free Ipads, Iphones, prepaid calling cards, subscriptions to Netflix, chickens, goats, shoes, condoms, Nikes, you name it.

Bishop on October 25, 2011 at 3:32 PM

But they don’t want to repay any of it, that’s their point.

They should get it for free.

Ask any OWSer, they’ll tell you…

catmman on October 25, 2011 at 3:33 PM

Free Money!!

faraway on October 25, 2011 at 3:35 PM

Well, he’s Effing them over pretty good when it comes to SS, Medicare, national debt, national security, and employment, so I guess it’s only fair that he gives them SOMETHING. Maybe he ought to propose legalizing weed, too. At least then, the future won’t hurt so bad….

notropis on October 25, 2011 at 3:35 PM

portlandon on October 25, 2011 at 3:28 PM

That’s exactly right.

ORconservative on October 25, 2011 at 3:35 PM

It’s glaringly obvious that even the lsm makes note of his political pandering, but just laughs it off

cmsinaz on October 25, 2011 at 3:36 PM

Anyone remember the ‘Occupy’ protesting college student claiming he wants the Federal Government to pay for his entire college tuition, declaring, “I want it because that’s what I want”?! Why now?! Seriously? We have seen the ‘Occupy’ protests supported, organized, and run by the Communist, ‘Progressive’, and Socialist parties, the Unions/SEIU, Nazis, and The New Black Panthers…while Obama repeatedly professes his support and claims how much he empathizes with THESE people! He is just joining his ‘brothers and sisters in arms and ideology, in continuing to bankrupt and estroy this country, thus fulfilling his campaign promise to ‘fundamentally change the US’!

easyt65 on October 25, 2011 at 3:36 PM

You know it bishop

cmsinaz on October 25, 2011 at 3:36 PM

One of the main issues of the OWS crowd is getting money out of politics.

Shouldn’t the same hold true for both end of the income scale?

Shouldn’t buying votes be condemned?

Chip on October 25, 2011 at 3:38 PM

If I have to pay, I get to pick the major.

tommylotto on October 25, 2011 at 3:39 PM

It hurts to be this cynical, but the timing and sudden urgency of so many of the president’s recent proposals raises the possibility probability certainty that the president is politicizing again and again.

FIFY

Midas on October 25, 2011 at 3:39 PM

I’ve got student loans and I do not want them forgiven. I borrowed the money and it’s my responsibility to pay it back.

rbj on October 25, 2011 at 3:39 PM

By this time next year PBHO will be handing out free Ipads, Iphones, prepaid calling cards, subscriptions to Netflix, chickens, goats, shoes, condoms, Nikes, you name it.

Bishop on October 25, 2011 at 3:32 PM

When the people find they can vote themselves money, that will herald the end of the republic. Benjamin Franklin

It is impossible to introduce into society a greater change and a greater Evil than this: the conversion of the law into an instrument of plunder.
Frédéric Bastiat

A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.
Alexander Tytler

The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.
Alexis de Tocqueville

I’ve got a bad feeling about this.

Chip on October 25, 2011 at 3:42 PM

If it’s going to be forgiven, then why pay any of it back?

PatriotRider on October 25, 2011 at 3:43 PM

DWS can grab the “little Democrats” for indoctrination, and ObaMao can grab the little bit bigger ones.

onlineanalyst on October 25, 2011 at 3:44 PM

What a sap I am….I paid for my kids education while the takers in society get it all for “free”…

Looks like I paid for more than my kids education…

PatriotRider on October 25, 2011 at 3:45 PM

If I have to pay, I get to pick the major.

tommylotto on October 25, 2011 at 3:39 PM

I like your idea.

SlaveDog on October 25, 2011 at 3:45 PM

Someone with more knowledge than I have please explain to me how the President can spend $1 trillion of the people’s money without Congress’s approval.

Rational Thought on October 25, 2011 at 3:46 PM

Mr. Obama would also like to thank the GOP for ensuring him four more years to destroy the country by offering up a group of buffoons that can’t even unseat an incompetent of his caliber.

SuperCool on October 25, 2011 at 3:47 PM

This O strategy is all about finding another method of redistribution. It also smacks of sympathy towards the principles of sharia banking, which does not charge interest.

The frog is in the pot, and right now the water is on a slow simmer. We’re being indoctrinated, folks.

onlineanalyst on October 25, 2011 at 3:47 PM

Slightly OT, but can you believe that David Brooks actually wrote THIS? “Obama, a natural unifier and conciliator, seems on the verge of running as a divisive populist . . ”

Oh. David Brooks. Never mind.

DrStock on October 25, 2011 at 3:48 PM

By this time next year PBHO will be handing out free Ipads, Iphones, prepaid calling cards, subscriptions to Netflix, chickens, goats, shoes, condoms, Nikes, you name it.

Bishop on October 25, 2011 at 3:32 PM

You forgot Chevy Volts.

Obama will giving more crap away than Oprah.

portlandon on October 25, 2011 at 3:48 PM

Someone with more knowledge than I have please explain to me how the President can spend $1 trillion of the people’s money without Congress’s approval.
Rational Thought on October 25, 2011 at 3:46 PM

Only a racist would ask such a question.

Bishop on October 25, 2011 at 3:49 PM

“— in return for a vote.”

“Nice student loan you have there…

… It would be a shame if you had to pay it back.”

Seven Percent Solution on October 25, 2011 at 3:51 PM

No doubt the president really does want to help students repay their college loans — in return for a vote

He wants to help them not pay back their student loans.

But some consolidation scheme won’t be enough. People thought they would get their gas and houses and healthcare paid for with Obama money, and it just isn’t happening. All the booty is just going to Democrat cronies instead.

They are directing their rage at “bankers” for now, but B.O. knows his clock is ticking with his lunatic base.

forest on October 25, 2011 at 3:56 PM

Thank you Obama for letting me out of a bunch of student loan debt, I appreciate it, it will be the first of many bailouts for student loan borrowers thanks to the ridiculous tuition bubble.

Who says I have to vote for Obama, though? Yes he is pandering to me, but I can take his handout of taxpayer money and then vote for someone else, you know.

kaltes on October 25, 2011 at 3:58 PM

Loan forgiveness is wrong, and penalizes those who pay their debts in good faith.

On the other hand, student loans, like virtually every other loan, should be dischargeable in bankruptcy. It does affect your credit for a long time, but at least the bleeding stops.

The problem goes back to the defaults of the ’80s and early 90s, which led Congress to make first federal/federally guaranteed, student loans nondischargeable beginning in 1998, and all student loans nondischargeable after the bankruptcy reforms of 2005.

CatoRenasci on October 25, 2011 at 3:59 PM

“Here’s a trillion bucks, please remember me on election day!” -Obooba.

Akzed on October 25, 2011 at 4:00 PM

There needs to be a clarification…..private student loans are not guaranteed by the federal government. Direct Loans and Family Education Loan Program (FELP) loans are. FELP is now defunct (by Obama) but was funded by private companies (banks, not for profit,etc.) issuing bonds. Where if the FELP borrower died, defaulted or became disabled the federal government would then pay the lender.

Rndguy on October 25, 2011 at 4:00 PM

No doubt the president really does want to help students repay their college loans dump their debt onto other people — in return for a vote.

FIFY

BobMbx on October 25, 2011 at 4:01 PM

By this time next year PBHO will be handing out free Ipads, Iphones, prepaid calling cards, subscriptions to Netflix, chickens, goats, shoes, condoms, Nikes, you name it.

Bishop on October 25, 2011 at 3:32 PM

Does he think he’s running against Karzai?

teke184 on October 25, 2011 at 4:06 PM

Hahaha, that’s because the president can’t run on his merits or his accomplishments so he’s running around the country in his (our) big black magic bus, promising skittles to the masses.

scalleywag on October 25, 2011 at 4:09 PM

I’m paying back a lot of student loan debt. It was my choice to take it and it is my responsibility to pay it back.

That being said, if student loan debt is forgiven I do think there will be a positive impact on the economy. It will free up a lot of money to stimulate the economy in other ways. (People shopping, buying houses, taking trips.

BUT, as someone else said, at the very least student loan debt should be dischargeable in bankruptcy. I don’t think that would create a big incentive to take out a lot of money and then declare bankruptcy. There is still a big disincentive to declaring.

athenanyc on October 25, 2011 at 4:15 PM

And when those students get jobs, and become tax payers, they’ll be b!tching, because of the plight of the country, the high taxes, and such, all to pay back for this crap.

Barry, you are one smart cookie. NOT!!! And those that would support and vote for you, are even worse!

capejasmine on October 25, 2011 at 4:19 PM

Uncle Sam should get out of the loan business entirely. I’m proposing a law preventing the U.S. from charging interest on loans to U.S. citizens. That’d eliminate some of the financial interest in getting into the investing business, and also get rid of a conflict of interest. The holder of law enforcement powers should not also be a collection agency.

Forgiving existing student loan debt doesn’t add money to the economy. All it does is increase the amount Uncle Sam has to borrow to pay bad debts it has taken on. And government backstopping of student loans is a major reason for the inflation of tuition.

hawksruleva on October 25, 2011 at 4:20 PM

the president is politicizing again and again.

When has he ever done anything when he’s not politicizing?

GarandFan on October 25, 2011 at 4:22 PM

The higher education bubble must remain inflated.

Sugar Land on October 25, 2011 at 4:22 PM

barry must keep the education loan money flowing big time. if ‘youths’ stopped going to school they’d be counted as unemployed. barry is desperate to keep them in school as long as possible.

r keller on October 25, 2011 at 4:26 PM

It’s shocking a Chicago machine politician is trying to buy votes.

gwelf on October 25, 2011 at 4:27 PM

There is a trillion dollars of student loans owed to someone, the banks, Sallie Mae, whomever. If those responsible for those loans are forgiven, they keep their money, yes, but that trillion bucks has to come from somewhere. Do the banks eat it? Does the Fed print money to buy the loans? Does Congress appropriate money to pay off the notes? That money will be taken from the economy either in the form of taxation or inflation or absence of capital. Oh and with the promise of easier loans, expect the ethical institutions of higher learning to raise their tuitions accordingly.

xkaydet65 on October 25, 2011 at 4:27 PM

Note to self:

Enroll in college. Borrow $250K. Drop out of college. Never pay back a dime. Wait for Obama to forgive my loan.

angryed on October 25, 2011 at 4:34 PM

Well He is going to do anything he can to get re-elected. I am expecting massive voter fraud. The tip of the iceberg is showing up.
http://www.foxnews.com/politics/2011/10/25/voter-fraud-allegations-hit-san-francisco-mayors-race/
This is how he and those like him will try to get him re-elected. So Gird your loins, its going to get nasty.

ColdWarrior57 on October 25, 2011 at 4:50 PM

The..
adults..
are..
in..
charge?

doesn’t seem that way to me.

smfic on October 25, 2011 at 4:58 PM

If we can’t dazzle ‘em, let’s buy ‘em

rjoco1 on October 25, 2011 at 5:18 PM

Why not? From the point of view of Barack Hussein Obama and all his supporters, it’s a perfect “win/win” scenario.

Just like Solyndra, GM, and everything else this man has ever touched in his entire life: Nobody ever gets screwed over, except American taxpayers.

logis on October 25, 2011 at 5:56 PM

How many Executive Orders has O’bama issued now? The Left gave Bush all sorts of grief for issuing them, but Dear Leader gets a Pass.

Del Dolemonte on October 25, 2011 at 6:20 PM

Obama 1988 Occupy Chicago

/Big Gubmint.

Key West Reader on October 25, 2011 at 6:39 PM

Just flat out buying votes.

Should be illegal.

WisCon on October 25, 2011 at 6:58 PM

Well… comrade Barry’s entire education was paid for by the Saudi Gov’t which is why he fraudulently enrolled in Columbia and Harvard as a muslim student on a foreign student visa.

Mahdi on October 25, 2011 at 7:22 PM

Not that hard to figure out, “progressives” have said for awhile they
want “free college education for all”. What better way than to start with gov. backed student loans then a gov. take-over of student loans and then just slowly but surely reduce the amount of time before the loan is forgiven. TA-DA “free schooling”. I say schooling
because anybody this side of common sense wouldn’t want the gov. touching college after the the mess they made with “public education”.
Besides all of that IF WE CAN’T AFFORD THE “PUBLIC EDUCATION SYSTEM” WE HAVE NOW, HOW ARE WE GOING TO AFFORD THIS CRAP!!!

and Tina thought she was cynical.

revenge of prometheus on October 25, 2011 at 7:42 PM

I am suddenly switching to Obama although I despise the man!

Sherman1864 on October 25, 2011 at 8:18 PM

xkaydet65 nailed it!

If those responsible for those loans are forgiven, they keep their money, yes, but that trillion bucks has to come from somewhere. Do the banks eat it? Does the Fed print money to buy the loans? Does Congress appropriate money to pay off the notes? That money will be taken from the economy either in the form of taxation or inflation or absence of capital. Oh and with the promise of easier loans, expect the ethical institutions of higher learning to raise their tuitions accordingly.

This is just more government welfare that invites abuse and fraud.

True story. I struck up a conversation with a woman in an airport while waiting for our flight. The economy and the plight of recent college graduates came up. She openly (as in, without any hint of shame) detailed to me how her daughter plans to take advantage of Sugar-Daddy Obama’s generosity.

Her daughter is majoring in graphic design at an expensive CA university and already has $56,000 in student loans. She has already figured out exactly how she is going to game the system.

Realizing that the labor market is depressed, she is doing what millions of others will decide to do when Obama dangles this carrot in front of them… she is staying in school as long as she can and living off more student loans.

In her line of work, many people work on contract (1099/self-employed) and show very little income on their tax returns. Since she only has to pay 10% of her discretionary income, paying 10% of not-much is a great deal.

(By the way, who is going to sit there and calculate how much discretionary income millions of people have each month in order to determine how much they should be paying for their student loans?!?)

She has no incentive whatsoever to limit how much debt she racks-up, because she knows that she will not be held accountable to pay it back. Why stop at $56,000? $100,000! $150,000! $200,000! The sky’s the limit when you are spending free money!!

Then, after 20 years of repaying not much if any of her student loans, her debt will be forgiven. How neat! Like free money or something!!

That is exactly how the system will be gamed.

Take that example and multiply it by a millions of people.

We’ll have $2 trillion in government-guaranteed student loan debt in no time!

What a deal for the (mostly liberal) universities and vote-buying politicians.

Win/win indeed.

Too bad these kids don’t understand that they will lose in the end when their country becomes Greece.

So sad.

painesright on October 25, 2011 at 8:42 PM

athenanyc at 4:15 pm

Maybe for the short-term, but long-term the prospects are the same. Eventually the plum first jobs for college grads will have lower compensation (no need to help a young superstar pay off college debt), depressing downstream salaries, too. And so the ball rolls…

However, this is a game of long ball by Obama and it has nothing to do with economic recovery. Right now lots of young peopleare passing on the campus experience because it is so expensive. The left needs the indoctrination factories working at full capacity to counter those who have had their eyes opened. It’s a power play for a population that is already sympathetic to the left’s cause but who is vulnerable to the lessons of reality if the exposure happens too soon.

johnny alpha on October 25, 2011 at 8:57 PM

Hmm. What else happens in 2012?

Revenge.

RDE2010 on October 26, 2011 at 7:30 AM

Treats for the lapdogs.

John Deaux on October 26, 2011 at 8:58 AM

Forgiven debt is considered income by the IRS. Can you imagine the look on the faces of all those who think they’re gaming the system when that letter arrives?

John Deaux on October 26, 2011 at 9:00 AM

The higher education bubble must remain inflated.

Sugar Land on October 25, 2011 at 4:22 PM

Yup, those bastions of Progressivism must be protected and allowed to continue to charge outrageous fees. How else will we continue to afford all those well-paid professors and academic functionaries? and teachers union members? How about protesting the pay of the University presidents or chancellors?

I guess they really earned it, as opposed to some CEO who has to meet real financial goals and can actually be fired?

Some really are more equal….

Venril on October 26, 2011 at 4:51 PM

painesright on October 25, 2011 at 8:42 PM

More Cloward-Piven? What a great way to stress a system. Send more useful idiots to school, to rack-up enormous debt, knowing they’ll leave the government holding the bag.

John Deaux on October 26, 2011 at 9:00 AM

I hope the IRS does go after them, but I have a feeling there will be some sort of immunity granted…

Venril on October 26, 2011 at 4:57 PM