The Obama administration’s new-and-improved student-loan crisis plan, isn’t

posted at 6:41 pm on October 1, 2013 by Erika Johnsen

Yet another consequence of our stubbornly stagnating economy is the degree to which young people increasingly find themselves unemployed, underemployed, and otherwise delayed in starting down the road of their adult career paths. That, in turn, rather adversely effects their collective ability to start paying down those gigantic loans many of them took out to pay for college educations — which helps to explain why the rate of student-debt default is still rising precipitously, via Bloomberg:

About one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy.

The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said today. Based on a related measure, defaults are at the highest level since 1995.

The fresh data follows the announcement by Barack Obama’s administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes.

Yes, about that practically worthless plan of creating what is basically a knockoff of already-existing college rankings systems that President Obama unveiled with much fanfare last August: It is yet another mistaken attempt from the Obama administration to alleviate some of the symptoms of a problem without actually addressing the underlying disease, and the other and somewhat less-noticed part of that same plan sounds an awful lot like it’s going to be directly feeding the disease. Coming soon, still more Obama-admin PR geared at getting young people to like them, via the NYT:

Largely overlooked was a more immediate change that could make a dent in the rising number of student-loan borrowers going into default. Starting next month, the Department of Education will contact borrowers who are struggling to repay their federal loans to make sure they know all the options available to them.

“We think there are lots of people who could benefit from our income-based repayment programs but haven’t signed up, and we want to get to them before they default,” said Arne Duncan, the education secretary. “The challenge is getting the word out.”

To do that, the department is planning to send e-mails to those who seem most likely to benefit from the programs, explaining debt-relief plans based on the borrower’s income. …

Education Department officials stress that the programs are not meant for all borrowers, but as a safety net for those struggling with education debt. That is an ever-larger group as debt loads and defaults keep rising.

To borrow a phrase from President Obama, let me be clear: The single largest problem students are facing today is the easy, cheap, and indiscriminate availability of student loans that heighten demand and help universities raise their prices, proactively pursued as a matter of government policy. The Obama administration has done nothing to alleviate the phenomenon, and now they’re going to send out still more signals about how “easy” it will be to repay these huge loans after you graduate with a little help from Your Friend, The Federal Government.

If the federal government could perhaps just stop interfering in free markets, which would have the doubly beneficial effect of removing fuel from the student-loan crisis fire as well as engendering well-paying job opportunities for young people, it would do them a world of good beyond anything their relentlessly counterproductive panders can every accomplish.


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It is far past time to get government and money out of education.

Murphy9 on October 1, 2013 at 6:43 PM

Weird, I was just explaining this to DaVerb this morning. You see, the laws of economics and human behaviour are somewhat different in My Progressive Little Ponyland than they are Realville.

Resist We Much on October 1, 2013 at 6:53 PM

OT: California Obamacare site not doing well. Doesn’t load when I go to apply for my free stuff.

El_Terrible on October 1, 2013 at 6:54 PM

Soon, you will need to sign up for ObamaCare in order to get a student loan.

watertown on October 1, 2013 at 6:55 PM

It is far past time to get government and money out of education.

Murphy9 on October 1, 2013 at 6:43 PM

Do you realize how complicated they made students loans?

When i went to college I had loans. I went to a bank or wherever.. filled out the ap and when it came time to pay them off I got my bill and sent my payment. It was one payment and was one loan with one bank down town.

Now.. they’ve taken that simple process and created a vast government bureaucracy with multiple agencies. Now.. when you get your bill.. it is so confusing. They have made each loan for each semester separate. So when you pay you monthly bill.. $20. goes to one semester.. $100. to another semester’s loan.. $50. to another and so on. And they offer 16 different payment plans and if you want to consolidate all of your “individual loans”… that’s a whole separate process with a separate agency or office that could take 90 days or more before you are approved. I was with someone as they were talking to a loan assistant on the phone and the government assistant could only read from a script. They continually had to go on hold to answer basic questions. Her bill was so confusing she didn’t even know what she was paying. Very sad.

JellyToast on October 1, 2013 at 6:58 PM

Since these graduates will most likely be the ones over 26 yrs old and not on their parents health insurance, these are the target customers for O’s ponzi schemed healthcare system.

If they can’t repay their student loans, how the heck are they going to pay for premiums, deductibles and co-pays for healthcare???

CoffeeLover on October 1, 2013 at 6:59 PM

Soon, you will need to sign up for ObamaCare in order to get a student loan.

watertown on October 1, 2013 at 6:55 PM

It’ll be like the selective service question on the FAFSA form– Are you enrolled in Obamacare? Would you like to enroll at this time?

El_Terrible on October 1, 2013 at 7:02 PM

CoffeeLover on October 1, 2013 at 6:59 PM

I heard a story today that in Michigan, at least, your auto insurance premiums will go up if you don’t have health insurance. Now, think of the Millenials. They can’t afford Obamacare and, now, they won’t just be able to get off with paying a $95 fine in MI (if true) and possibly other states and go happily on their way. If they elect to pay the fine instead of buying the expensive insurance, they take it in the other end through their car insurance.

So, what happens when they are uninsured, unemployed, and are even asking themselves, ‘Dude, where’s my car?’

lol

Resist We Much on October 1, 2013 at 7:04 PM

Resist We Much on October 1, 2013 at 7:04 PM

I am sitting here just shaking my head RWM.

CoffeeLover on October 1, 2013 at 7:08 PM

There is nothing, not one thing – without exception, that Obama touches that is not damaging to the Republic.

There has never been a worse American, ever – without exception, than Obama.

That includes all of the most nefarious individuals from Benedict Arnold to Aaron Burr.

And all of those who we know because they are referred to in the criminal cadance of the full name, such as John Wilkes Booth, Lee Harvey Oswald, etc.

Obama is far worse, far more damaging.

He is out Hitler, our Stalin, our Pot…

Question is whether we allow him to stay long enough to start the killings.

History clearly shows that when “leaders” like Obama come to power that things go down the drain and quickly.

The first casualty is the rule of law…

That’s where we are right now.

Someone needs to stop him, and quickly before it’s too late.

turfmann on October 1, 2013 at 7:09 PM

This sounds suspiciously like the housing collapse. It’s almost like they are doing this on purpose to collapse the system. Clowerd-Piven *cough cough*

UnderstandingisPower on October 1, 2013 at 7:09 PM

I am thinking about going back to college
and changing careers. Several programs I looked into..
the college required I have health ins.

bazil9 on October 1, 2013 at 7:11 PM

Resist We Much on October 1, 2013 at 7:04 PM

Interesting tid-bit.

bazil9 on October 1, 2013 at 7:12 PM

The student loan crises makes my skin crawl.
Not surprisingly every solution the government comes up with steadfastly avoids the problem.
Its all about the green and keeping the liberal machine chugging.

ORconservative on October 1, 2013 at 7:13 PM

Weird, I was just explaining this to DaVerb this morning. You see, the laws of economics and human behaviour are somewhat different in My Progressive Little Ponyland than they are Realville.

Resist We Much on October 1, 2013 at 6:53 PM

Point of order – the laws of human behavio(u)r are the same in the ObamiNation and in Realville. It is the laws of economics that are somewhat different, though the difference is at most temporary.

Steve Eggleston on October 1, 2013 at 7:21 PM

To borrow a phrase from President Obama, let me be clear: The single largest problem students are facing today is the easy, cheap, and indiscriminate availability of student loans that heighten demand and help universities raise their prices, proactively pursued as a matter of government policy.

I would argue the same about state lottery “grants” that fund education…

ladyingray on October 1, 2013 at 7:23 PM

Point of order – the laws of human behavio(u)r are the same in the ObamiNation and in Realville. It is the laws of economics that are somewhat different, though the difference is at most temporary.

Steve Eggleston on October 1, 2013 at 7:21 PM

Not according to DaVerb. Per DaVerb, a 27 year-old will elect to pay thousands of dollars a year for a policy with a very high deductible and co-pays, which only pays 60% of her healthcare costs, because she will get a ‘free’ annual exam and contraceptives.

DaVerb believes that the toy in the McDonalds’ Happy Meal is ‘free’!

Resist We Much on October 1, 2013 at 7:29 PM

It is far past time to get government and money out of education.

[Murphy9 on October 1, 2013 at 6:43 PM]

I totally agree at least with regard to the Fed’s. They should be prohibited from being involved in any way.

Dusty on October 1, 2013 at 7:33 PM

Resist We Much on October 1, 2013 at 7:29 PM

Serious math challenged at a minimum. Without the math skills they can’t even do a rudimentary cost/benefit analysis to realize its cheaper to buy the contraceptive and pay for the yearly physical with cash and invest the rest.

chemman on October 1, 2013 at 7:41 PM

Not according to DaVerb. Per DaVerb, a 27 year-old will elect to pay thousands of dollars a year for a policy with a very high deductible and co-pays, which only pays 60% of her healthcare costs, because she will get a ‘free’ annual exam and contraceptives.

DaVerb believes that the toy in the McDonalds’ Happy Meal is ‘free’!

Resist We Much on October 1, 2013 at 7:29 PM

I can’t account for abject stupidity, though the laws of economics punishes that greatly.

Steve Eggleston on October 1, 2013 at 8:04 PM

I teach college part time. I tell my students – NO government loans; college tuition has risen at 3x the rate of inflation since the 1980′s; work, pay as you go. I suggest they set up a contract with a relative and agree to 2-3% interest (b/c you can’t earn that anywhere else) and DON’T STIFF THEM.

Interesting – a lot fewer Starbucks’ lattes in class than three years ago.

Other problem – too many students in college who really shouldn’t be there. It’s not for everyone, it just isn’t. Going to college b/c you can’t get a regular job and borrowing to boot makes no sense.

MN J on October 1, 2013 at 8:04 PM

I can’t account for abject stupidity, though the laws of economics punishes that greatly.

Steve Eggleston on October 1, 2013 at 8:04 PM

That’s why I differentiated My Progressive Little Ponyland from Realville. lolz

Resist We Much on October 1, 2013 at 8:12 PM

Other problem – too many students in college who really shouldn’t be there. It’s not for everyone, it just isn’t. Going to college b/c you can’t get a regular job and borrowing to boot makes no sense.

MN J on October 1, 2013 at 8:04 PM

and they’re there because of

the easy, cheap, and indiscriminate availability of student loans

talkingpoints on October 1, 2013 at 10:11 PM