In an effort to make more Americans dependent upon federal aid as possible. After enacting the Pay as You Earn student loan forgiveness plan, Obama quickly issued an executive order expanding the program:
Student loan issues will take center stage Monday, as President Barack Obama plans to circumvent Congress in issuing several new executive actions to reduce the debt burden of student borrowers.
Obama plans to announce several changes during remarks at the White House Monday, including the expansion of the federal Pay As You Earn program to all federal student loan borrowers, allowing them to cap monthly student loan payments at 10 percent of their incomes. The change is expected to affect up to 5 million additional borrowers and will be available by December 2015, the White House said. Obama will also direct Education Secretary Arne Duncan to take actions such as promoting awareness of repayment options and automatically lowering interest rates for active-duty military without the need for additional paperwork.
Obama said during his weekly address on Saturday that he would take matters into his own hands to help student borrowers, as Congress decides whether it will take action on a proposed bill to allow for refinancing of student loans.
Now the impact is being felt:
In obscure data tables buried deep in its 2016 budget proposal, the Obama administration revealed this week that its student loan program had a $21.8 billion shortfall last year, apparently the largest ever recorded for any government credit program.
The main cause of the shortfall was President Barack Obama’s recent efforts to provide relief for borrowers drowning in student debt, reforms that have already begun to reduce loan payments to the government. For more than two decades, budget analysts have recalculated the projected costs of about 120 credit programs every year, but they have never lowered their expectations of repayments this dramatically. The $21.8 billion revision—larger than the annual budget for NASA, or the Interior Department and EPA combined—will be tacked onto the federal deficit.
Think about that for a moment. A shortfall in the student loan program that is larger than the budget for three executive departments combined. That deserves its own wing in the Museum of #FAIL.
I’ve never heard anyone give a good explanation for why we need a federal student loan forgiveness program. To a great extent stupidity only works as an deterrent if it is painful and by shielding people from the impact of their own misfeasance we actually encourage other people to be stupid. If you want to rack up $100,000 getting a PhD in Jazz Piccolo, knock yourself out. But there isn’t even one good reason why the federal government should coerce money from people who are working in order to bail you out. Does that mean some people will have their dreams crushed? Of course. But it means that even more people will act more responsibly.
By this program, what the Democrats in general, and Obama in particular, have done it deliberately remove any brakes that may have existed on the cost of college.
With this “pay as you earn” system the student no longer cares about cost because their loan payments are pegged to their disposable income and are forgiven in 20 years if not paid off; lenders no longer care about the size of the loan or the ability to pay because the loans are backstopped by the US government; colleges no longer care about controlling price because neither students nor lenders care about price.
What this is doing is letting a lot of kids waste four years of their life getting a useless degree while the government bleeds cash. Congress needs to revisit this program and wind it down because it does no good and great deal of damage.