and fresh union dues to government unions every time Pomp and Circumstances get played. That’s what he really wants; more people totally in thrall to govenment.

Would be to cut the Marxist University professor’s salary.

Your student loan payments will be capped at no more than 10% of the amount by which your income exceeds a “basic cost of living” amount. And all your debts will be forgiven after 20 years if you work in the private sector, or 10 years if you have a government job.

So this is effectively a price cap for a service with no “built-in incentives to cut costs.” This is almost exactly analogous to the HCR debate: If price isn’t going to ration entrants, what is? Get ready for overwhelming demand for government-managed student loans, followed by government deciding which select few get to receive those loans (i.e. go to college), using government’s criteria.

Also, prepare for the self-funded college student to go the way of the dodo bird, to the extent they haven’t already.

… With which Obama moves to enact his radical agenda is indeed audacious. To actually propose that student loans owed by government workers should be forgiven in half the time of loans owed by private sector workers should be unthinkable. Yet he thinks it, and proposes it as policy.

model of CRADLE TO GRAVE big government takes care of ALL! The “GOVERNMENT ELITES, politically connected, Old Rich which can hold on to its wealth, and the “chosen ones by the state” will live and lead the “GOOD LIFE” while innovation, risk taking and individual achievement and excellence to make a better life for oneself will go the way of the dodo bird! The Lords and Ladies of Big Government will have their “serfs” at their beckon call! Anyone for being a “COURT JESTER”???????

A slick plan, inflate costs of college with “free” or low cost money which gets funneled to your cronies in education. That driving up in price forces more people to finance with the only game in town, Obama the loan shark. Then Obama the loan shark is a hero for letting you “work” off your loan by joining his army. A triple win for Obama and a big loss for America and the taxpayers.

I wrote about it last week here:http://www.redstate.com/common_cents/2010/01/21/a-method-to-his-madness-how-obama-will-draft-his-army-103-billion-in-student-loans-at-a-time/

Why is he not going after corporations and forcing them to pay my student loans? I mean I went to college to work for them in the first place…

(note sarcasm)

This reminded me of one of my old diaries back on the old Redstate from Nov. of 2006:

So Democrats are proposing to cut interest on student loans. Color me unimpressed. It is just another way for them to throw money at a problem. What we need is a conservative, market-based solution. We already have half in place through student loans. Those loans, however, need to be tied to results. The federal government can still guarantee that students will get loans and interest rates can be lower than other loans, but the interest should be tied to loan repayment rates of each individual university and (possibly) majors at each institution. This will give feedback to students and should weed out the weaker educational establishments. Another idea for student funding would follow a familiar business practice: the stock market. Student stocks will be sold again based on university and major. We could even have mutual funds for the ivy league or groups of majors like engineering. In return for funding students would be required to pay a percentage of their earnings (based on gross income in tax returns) for a specified number of years back to the stock holders. This dividend is payable whether their job is based on their education or not. Students would not have to worry about being dragged into debt because it is based on earnings, not anything they “owe”. Of course there are a lot of details to be worked out, but the market would only be regulated by the government and not funded by it.

. . . Is a problem best left to individual states. If state higher ed (of which I am a graduate, go Hokies!) costs too much, states need to look at cutting costs at these institutions. Much of the money goes to bloated bureacracies, which I’ve heard are quite large. Maybe we could fire Dr. Mann at Penn State?

Messing around with student loans, something where the system actually does work, is a horrible idea. It rewards graduates who become bureaucrats, it misses the mark of where costs of college come from, and finally it will ultimately create a new, awful entitlement program.

On the bright side, we can be thankful that Obama has not felt the need to nationalize America’s colleges.

This is in response to ofsneocon’s comment. I agree that the educational funding should be done at the state level (primarily because I’m unaware of any provision in the Constitution granting this power to the federal government), but I can’t agree that the current system is working.

What the current system has done is completely isolate the higher ed industry (and don’t be fooled, it IS an industry) from any need for market discipline. When was the last time you heard about a college going out of business? They get away with treating their customers as an annoyance, they collude with each other to set prices and costs, They grant lifetime employment (tenure) and create coures, programs, and departments based on a vision that at no point comes in contact with the real world.

What the current system has accompished is to flooded the market with job seekers carrying useless liberal-arts degrees; it’s ‘devalued the currency’ of a college degree to the point where it’s functionally displaced the high school diploma after forcing job seekers to squander four years that might otherwise have been productive and incurring tens of thousands in personal debt.

The best thing the feds could do for middle class kids would be to expand vocational training and limit student loans at four-year institutions to strategically important programs (science, math, and engineering).

No one should get a single federal dollar to pursue a degree in English, Art History, Womens Studies, or any other useless-but-personally-fulfilling liberal arts degrees available. In other words, go get fulfilled on your own dime.

Believe me, as an owner of a 6 figure student loan, I am tempted to participate in a program like this if it ever became reality. BUT, and here is the BUT- I understand that this does not solve the problem and only lends itself to more problems. You can’t put a band-aid on a broken arm. In order to pay my student loan note every month I had to…wait for it…budget myself! (Oh the horror) Yep…I had to cut back the spending to increase the paying and it hurts, but I don’t want to be part of the problem and that is what it would feel like to participate in this. The very same reason I didn’t join in the “Cash for Clunkers” scam. There is no easy way out and no quick fix. You have to pay back what you owe. Might actually teach people to be fiscally responsible. Someone still has to pay if your loan is “forgiven” and it is the taxpayers. The ones who live paycheck to paycheck and struggle every month to make sure everything is paid. This administration seems so willing to break the backs of responsible people to pay for those that are not.

It’s widely known that the fact that banks and mortgage brokers sold their loans instead of holding them caused them to ignore sound underwriting principles. Similarly, universities for the most part do not directly lend to the consumers of their services. Unlike people who take out a mortgage, consumers of student loans cannot just hand back the keys and absolve themselves of the debt. The federal government also provides repayment insurance to lenders in its loan programs. As a result of these factors, neither universities nor private capital has an incentive to focus on the economic value of degree programs or their suitability for a given individual.

Although it is good that the current system provides incentives to individuals to wisely choose degree programs and financing, it provides fewer incentives to lenders and universities. If universities lent directly to students, held the loans on their books, and the loans were subject to some level of default risk, then they would pay more attention to offering economically viable courses of instruction.

Another flaw with the current system is that the interest rates offered do not vary according to measures of student ability or likely career outcomes. This causes lending to marginal students who are unlikely to complete their degrees, excess investment in liberal indoctrination studies, country club campuses, and the diversion of funding from productive courses of study.

But I wouldn’t so much say The Big 0 wants to “create a new entitlement” as much as it is that he wants to formalize the existing arrangements. It’s been more than 20 years since I’ve seen the inside of a classroom. Back then tuition increases were pretty much running 50-100% more than inflation and that was at a commonwealth endowed school. As far as I know, that didn’t change during the whole time I was away. None of it was sustainable except for the largess the feds were shoveling to the schools. As for the payment terms with some of the deals that have been run that might just be formalizing things too. Military service, AmeriCorps, or teaching in the inner city gets you pretty much the same deal (the first deserve it, the other two not so much).

Evanm: I don’t think I’d characterize it as rationing students. More like rationing what the colleges spend on. For what students pay, the colleges ought to be able to provide teachers. But there is no discipline because they’ve been able to count on siphoning government money via students.

After all, not too long ago, the U of DE and just recently the U of MN had proposals to enforce “social justice” curriculum(s) on entire student bodies (at U of MN the graduate school of ed.), and they were just averted through columnists like Mike Adams, FIRE, and local outrage via news reports and alerted alumni and parents. There’s an entire ACORN High School for Social Justice in Brooklyn where kids learn the all whites are racists, black failure is white people’s fault, and America is not even as positive as portrayed by Rev. Wright.
When Obamantion’s minions run student loans, the next thing you’ll know is that his people get cheaper and larger loans than those white racists who used to run everything. Didn’t he say as part of Obamanationcare that more minorities HAD to become doctors?
Then there are his new “programs” to help the middle class and create jobs. GOV’T CAN ONLY CREATE GOV’T JOBS. It is worthless to the private sector and should simply stop trying. As to the other agglomerations, the tea parties simply want LESS gov’t and not more of anything.
But these guys just can’t give up. It’ll be a fight every day for at least three more years.

Casual lunch break conversation between a fellow worker (significantly higher placed in the company than I) slowly shifted into uncomfortable disagreement that urged our lunch mates around us to slowly migrate away.

Her argument was that would-be college students couldn’t get loans. When I pressed her for details, it turned into couldn’t get *reasonable rates* for loans. Further pressing led her to explain that they couldn’t get loans under 15% interest.

What? You didn’t know that the college industry was in the toilet? Because students can’t get loans? I know. It was news to me too.

I countered that my 18-year old son just this year managed to score a loan under that percentage rate for his college tuition. She countered that my son is in the vast minority. Of course.

I asked her why such an alleged epidemic was noticeably absent from the news outlets, social discourse, etc. I mean — why is Obeyme’s takeover the first I’ve heard about it if this has been such a problem for years? Cover up, of course.

FWIW, I recommended that students can always enlist to get financial aid. Hoo-boy. That illicited quite a response. It was shortly thereafter I departed.

After the President takes over student loans he can forgive them by decree… Today I see a huge majority of the people applying for sub-prime auto loans have defaulted student loans on their credit report… and they are not attending school. By law these loans, like child support payments, cannot be forgiven even in bankruptcy.
Another method for the Left Wing to funnel monies to it’s minions in the Acorn-Seiu group….
patlandy

“No one should get a single federal dollar to pursue a degree in English, Art History, Womens Studies, or any other useless-but-personally-fulfilling liberal arts degrees available. In other words, go get fulfilled on your own dime.”

Consider that the government uses the lever of student loans to inflict its social policies and philosophies on institutions. Consider also that there are institutions which do not accept students with government loans for precisely that reason. One can easily anticipate these schools (generally bastions of classical education) being killed off via this “wonderful” new program. Gives even more emphasis to political correctness at institutions of “higher learning”.

“The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse.” –James Madison

But we don’t have to. Thanks to Barack Hubris Obama, tuition rates will skyrocket there for us.

“But colleges and universities are also like hospitals and medical practices in another sense: with no built-in incentives to cut costs, they don’t cut costs.”

Private colleges and universities do have incentives to cut cost. They do not have state subsidies to cover their costs.

A private college or university will look long and hard before raising tuition.

Banks are not in the business of making loans to lose money. The 10% per year with a write off of unpaid balances after 20 (or 10) years of work will effectively cap how much banks will be willing to loan students. Those caps will likely be adjusted regionally and by discipline.

For example, assume the average college graduate with a degree in business will earn $40,000 a year his / her first year out with about 5% per year salary increases thereafter. In 10 years his / her annual salary would be about $65,000; in 20 years it would be about $101,000. The total that person could have paid for students loans under Obama’s rule is about $57,000 over 10 years and about $132,000 over 20 years.

Some regions of the country have more government employees than others. Some degrees (like public policy and elementary education) are more likely to result in the student obtaining a government job.The net effect – if you’re attempting to get a degree in elementary ed, the most you’ll likely be loaned will be $57,000 – in a region where teacher salaries start at $40,000. If you live in an area with lots of government employees (like Northern Virginia) you probably won’t be able to get a student loan in excess of $57,000.

It also means that private college, where 4 year tuition may well exceed $132,000, will be out of reach for many families. Perhaps that’s the intent – keep the elites at the elite schools so that they can govern the dirty unwashed.

Why is the conservative argument about who gets what and how much? The argument should be ‘the Federal Government has no Constitutional authority to create or fund student loans. Nor, the Dept of Education for that matter!!

……although that can be lucrative.

The big money made by SLMA was / is in bundling the loans and selling them on the open market as student loan backed securities. SLMA’s model was / is much like FNMA and FMAC. They make direct loans to students and purchase students loans from banks. The loans are bundled and sold as student loan backed securities. That ensured that there was a supply of cash available so that more students loans could be made.

Removing that takes a huge source of liquidity away so that less money will be available for loans. Yet again, it won’t be the poor who suffer, it’ll be the middle class which finds that there is less and a less cash available to help them send their kids to college.