Obama on student loan rates: “It’s like déjà vu all over again.” …Yes, yes it is.

posted at 4:41 pm on May 31, 2013 by Erika Johnsen

As I mentioned he would be earlier this week, President Obama dedicated his Friday morning to educating the youths he used as backdrops at the White House about why it is that the GOP’s idea to fix this cyclical federal student-loan battle by tying interest rates to the market, instead of the president’s own plan allowing politicians to continue to arbitrarily determine the interest rates that they deem appropriate, is such a very terrible take on the problem. It went pretty much exactly as you’d expect.

Key words: “Fair.” “Investments.” “Not the time for us to turn our back on young people.” Ugh.

Let us overlook for a moment the fact that the president is perpetuating a student-loan bubble via a broken system that floods that market with too much demand that in turn causes college prices to just keep right on rising, and focus instead on the fact that the differences between the president’s and the GOP’s plans will have a negligible impact on actual student-loan payments. This is just politics as usual, via the WSJ:

House Education Chairman John Kline’s bill sets floating rates on new Stafford loans at the 10-year Treasury rate plus 2.5%, while also protecting borrowers by capping the rates at 8.5%. Under this plan, a borrower can consolidate his loans after graduation to achieve a fixed rate.

Mr. Obama’s plan is purely for fixed, not floating, rates at the 10-year Treasury rate plus 0.93% or 2.93% depending on the type of Stafford loan, and it has no rate cap. We wish both the House and Mr. Obama would drive a harder bargain on behalf of the taxpayer, but they aren’t separated by a difference of philosophy. A spread of 93 or 293 basis points means the President cares about young people, but 250 basis points signifies unspeakable cruelty? …

Under either plan, rates for new Stafford loans for undergraduates will not nearly rise all the way to 6.8% from 3.4%, as they are scheduled to do on July 1. But the White House likes to run against a doubling of rates even when, as in this case, they are running unopposed. It has been a good political issue for Team Obama in the past, and there’s another reason they may regard it as favorable ground to attack imaginary adversaries.

Hey, if President Obama really wants to focus in on helping young people with life after college, maybe we could worry a little less about piddling, stimulus-esque, big-government market interferences and a little more on our sluggish economy and 16 percent youth unemployment rate? Anyone?


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Cloward – Piven

Right in front of everyone’s eyes.

trs on May 31, 2013 at 4:43 PM

Can we ever expect there to be an adult in the WH?

Sabercat2 on May 31, 2013 at 4:46 PM

Fiddle with interest all you want. It’s the principle that’s the problem.

Jabberwock on May 31, 2013 at 4:54 PM

Next Obama will bring out the Algae and High Speed Rail talking points and we’ll be off to the races.

AYNBLAND on May 31, 2013 at 4:59 PM

Young, ignorant, and ready to take a bribe…

What’s not to like?

BigWyo on May 31, 2013 at 4:59 PM

You’ll have to pardon “The Idiot-in-Chief”. Socialists don’t study economics.

GarandFan on May 31, 2013 at 5:00 PM

Meaningless.

hillsoftx on May 31, 2013 at 5:01 PM

Young, ignorant, and ready to take a bribe…

What’s not to like?

BigWyo on May 31, 2013 at 4:59 PM

Nothing! It is why he got a second term.

Happy Nomad on May 31, 2013 at 5:03 PM

In large part, it IS government interference that is responsible for education inflation, which is higher than healthcare, food, and energy inflation. The cost of a college education has been increasing ever since the government got involved in the student loan business and I notice that the Left never complains about Big Ed. The schools can jack up tuition knowing that they will get their money. The government knows that it will get repaid (or the banks know when we are talking about private student loans) because school loans ARE NOT DISCHARGEABLE IN BANKRUPTCY.

It is a vicious cycle and holding down interest rates artificially won’t really solve the problem. If you have to pay 7% interest on an education that costs you only $50,000, you are still getting a better deal than a $200,000 education at 3%.

Resist We Much on May 31, 2013 at 5:03 PM

If you turn your parents in to the authorities for infractions such as possessing unregistered guns or attending a TEA party rally, your reward will be a super-low Democrat party-guaranteed interest rate on your school loans, otherwise, you’ll be stuck paying the outrageous rates that conservatives are forcing you to pay.

How long can it be before this becomes official, accepted policy?

BobMbx on May 31, 2013 at 5:04 PM

When the Govt. took over these loans and used the revenue ( interest ) as a way to make ACA revenue neutral, thus making it passable, what interest rate did they instruct the OMB to use in their calculation ?

I do not know, but given the desperation and hijinks of the moment, it is an interesting question as this revenue made the whole ACA thing possible.

Jabberwock on May 31, 2013 at 5:06 PM

You’ll have to pardon “The Idiot-in-Chief”. Socialists don’t study economics.

GarandFan on May 31, 2013 at 5:00 PM

Given the number of scandals swirling around the toilet bowl that is this administration……. I’d be very careful in using the word pardon. Also the terms unindicted co-conspirator and compelling legal authority but those are less likely to come up in chat at a cocktail party.

Happy Nomad on May 31, 2013 at 5:06 PM

All I heard was: “blah blah blah FREE STUFF blah blah blah…”

– typical college student

Socratease on May 31, 2013 at 5:09 PM

This president is ALL about funding the left and defunding the right. Writing a blank check to liberal academia is writing a blank check to liberal academia, no further justification is needed.

You start increasing interest rates and thought will happen and some kids might weigh the costs, thus decreasing the supply of money to the left.

Axeman on May 31, 2013 at 5:16 PM

I paid mine, in full so there’s that.

mickytx on May 31, 2013 at 5:33 PM

More graduates with no jobs, perfect.

But, hey, continued cash flow for educators to mis-educate tomorrow’s leftist educators, who can keep-on-keeping-on. Gotta love it.

IndieDogg on May 31, 2013 at 5:49 PM

It’s not about the students, it’s about the administration and faculty at the colleges. Those folks are way overpaid and in a market based system, they’d be cut.

Deafdog on May 31, 2013 at 5:49 PM

A lower interest rate on a loan you can’t pay with a job at Starbuck’s isn’t going to help.

Sekhmet on May 31, 2013 at 5:53 PM

It’s not about the students, it’s about the administration and faculty at the colleges. Those folks are way overpaid and in a market based system, they’d be cut.

Deafdog on May 31, 2013 at 5:49 PM

I’d slightly disagree.

Colleges used to be more focused. There were engineering colleges, teacher’s colleges, liberal arts colleges.. Now these are merely programs within the school.

IMO, a market smart move for some of these colleges is to go back to a smaller set of core competencies. Strive to be “awesome” if you want to get a degree in this particular discipline and jettison the rest along with the faculty. Start by getting rid of anything dealing with gender studies unless you want that to be your core competency. But be warned…. Wellesly and Sarah Lawrence may have already cornered that market.

Happy Nomad on May 31, 2013 at 6:18 PM

The government knows that it will get repaid (or the banks know when we are talking about private student loans) because school loans ARE NOT DISCHARGEABLE IN BANKRUPTCY.

Resist We Much on May 31, 2013 at 5:03 PM

Apparently the 9th Circuit (natch) doesn’t believe it has to follow the Bankruptcy Code any longer!

Syzygy on May 31, 2013 at 6:22 PM

Yeah it is. Its the F’ing government meddling with private industry again.

FAIL!

TX-96 on May 31, 2013 at 6:24 PM

Hope and change college students voted for!

albill on May 31, 2013 at 6:24 PM

Apparently the 9th Circuit (natch) doesn’t believe it has to follow the Bankruptcy Code any longer!

Syzygy on May 31, 2013 at 6:22 PM

So, now student loans are just a bald face transfer of federal funds to universities.

Count to 10 on May 31, 2013 at 8:51 PM

Apparently the 9th Circuit (natch) doesn’t believe it has to follow the Bankruptcy Code any longer!
Syzygy on May 31, 2013 at 6:22 PM
So, now student loans are just a bald face transfer of federal funds to universities.
Count to 10 on May 31, 2013 at 8:51 PM

Pretty much.

If any corporation bilked its customers the way “educators” did they’d be hauled up in front of Congress.

gwelf on May 31, 2013 at 9:00 PM

No mention here of how Obamuh jacked up the interest rates and is using the interest money to fund the ObamaScare/RobertsTax scam? The little dumbmasses are already paying for it (well, those who have jobs and are actually paying back their loans) and they don’t even know it.

stukinIL4now on June 1, 2013 at 8:27 AM

Electricity from offshore wind power is over double that for land based. Yet, on average we are talking about needing almost 95 square miles to generate 1,000 megawatts (delivered is around 370 MW) because they have to be separated, with a power density of 1.5.

Compare that to a natural gas plant: .3 square miles, generate 3,750 MW (delivered 3200 MW) power density of 3600.

Coal: .6 square miles, 1,600 MW (delivered 1,300), density of 850.

Did I mention that wind power costs are typically 2-4 times the cost of nuclear, natural gas, and coal, especially when you factor in the direct subsidies paid out by government?

William Teach on June 3, 2013 at 7:55 PM

Woops, somehow got the wrong post.

William Teach on June 3, 2013 at 8:38 PM