Student Loan Nightmare Another Government Failure

Here is just one more example of how Mr Obama and the progressive socialist liberals are using the student loan nightmare to increase their voting base. Students take out loans to finance an education that will not do the student any good as most of the education they get is worthless.

And not only that, given the horrible job market most college graduates, they will not be able to get a job to pay off their loans. What recourse will the students have but to rely on the feds to pay their bills. And if the taxpayers are to pay the bill, the students will have to vote to keep the progressives in power.

As this article points out the schools are charging more knowing the feds will pick up the tab. This is a win win for the progressive socialist and a complete losing situation for the students and taxpayers.

Who knew? Everyone knew when the government took over the student loan program what the intention was from the beginning, but no one cared. So many among us were so in love the fantasy of our beloved president and too busy going tic tic tic on their IPhones.

Remember, elections have consequences and it appears the consequences of reelection Mr Obama will be dependence and poverty for millions of Americans.

Student Loans: The Next Housing Crisis?
February 4, 2013
Source: Jay Bowen, "Student Loans: Another Federal Debacle," The Freeman, January 29, 2013.

The same policy gurus that cooked up the housing crisis, a post office on the brink of disaster and an education system that fails to educate our youth provide the latest debacle: the student loan crisis. With total loan amounts increasing at an exponential rate, it is only a matter of time before loan defaults occur en masse, says Jay Bowen of the Foundation for Economic Education.

• Outstanding student loans are now close to $1 trillion, according to Federal Reserve Bank of New York. This makes student loans the largest and fastest growing share of non-mortgage consumer borrowing.
• Total student loans have grown by 75 percent since 2007, while other forms of consumer debt have fallen -- both likely effects of the economic downturn.
• The Department of Education lent $133 billion in 2010 and $157 billion in 2011.

The trend in late student loan repayments is mirroring a pattern seen during the subprime mortgage crisis. The U.S. Department of Education has created programs that allow leniency through "income-based" repayment plans and forbearance timetables. Bowen projects that taxpayers may eventually be responsible for tens of billions of dollars in unpaid student loans.

• Sixty-six percent of recent college grads have outstanding student loans totaling more than $25,000.
• Fifty-three percent of recent college graduates are unemployed or underemployed.
• Tuition at public, four-year universities has risen by an inflation-adjusted 72 percent since 2000.

The meteoric rise in tuition costs is partly due to more students receiving blind encouragement to borrow large sums of money for school. With the government spigot open wide, universities have realized that as much as they charge, the students will be able to borrow that and more. This has led to large college bureaucracies that are inefficient.

Student debt of this magnitude can have important social consequences. Recent graduates, struggling to pay off their loans, may delay buying a house or getting married. Before the student loan bubble bursts and taxpayers are on the hook for billions, the government needs to quit overspending and exit the lending market.

Private market underwriting standards and arrangements between private employers and students could solve some of the student loan problem. In the long run, Bowen says that the government should not intervene aggressively in the education market and instead return to the principles of limited government in the free market.