On a pretty regular basis during the last few years, we’ve seen stories concerning “outrageous” student loan rates and “unbearably-high” student loan principal amounts. The target is almost always the evil private student loan industrial complex and the employers who just won’t pay these kids enough money to pay off their loans. Should they direct their disgust elsewhere?
In 2010, Congress pass and President Obama signed the Health Care and Education Reconciliation Act. Along with cutting off the private student loan market by removing subsidies, making loans pretty much the exclusive realm of the federal government, the legislation capped the repayments of new loans to 10 percent of the persons discretionary income. The previous cap was 15 percent.
Does everyone understand how low student loan rates are? Borrowing money for college during the last 10 years has never been less expensive. So why are Democrats freaking out about the loan interest rates, while turning a blind eye to the huge tuition increases at public (and private) colleges and universities?
Do you think the holder of a private school loan is heartless for demanding payment on a student loan of a person who has died?
If someone asked you about total college loan debt as compared to credit card and car loan debt, would you know that college loan debt was highest?
Broken record indeed. The only answer President Obama has in response to questions like the one asked yesterday in Iowa is that he knows times are tough, but at least kids have health care until they are 26 and the government took over the “terrible” student loan system.
Democrats in Congress don’t like middlemen; at least they don’t like middlemen in the private sector. The Obama administration and Democrats – exclusively – banned private banks and financial institutions from the student loan business, and 2,500 employees at Sallie Mae will lose their jobs.
Given the title of this post you are, no doubt, wondering how these two concepts could possibly be linked. But, they are.
To jam Obamacare down our throats, the House must first pass the Senate bill, and, simultaneously pass what I call the “fix it” bill. The “fix it” bill will include the things that the House doesn’t like about the Senate bill…such as, not enough subsidies for folks to offset the cost of their insurance, and, less tax dollars from taxing “cadillac” (aka, union) insurance plans.
The plan is to have the “fix it bill” pass through the Senate under the reconciliation process under which only 51 votes are necessary for passage, thus cutting off a filibuster that could stall the bill.
Here’s the problem. With the House spending more money on subsidies, and, collecting less money in taxes from union insurance plans, the claimed cost of Obamacare will necessarily rise…by a lot.
What to do?
Include the government take over of student loans in the “fix it” bill being drafted by the House. According to Obama, this take over will save $67 billion. Which, surprise, surprise, will offset the increased costs of Obamacare under the House “fix it” bill.
Problem solved. Not only does Obamacare become “deficit neutral”, but the government take over of the student loan program, which would never have passed the Senate under normal rules, is now accomplished
As the theme song from the television series “Monk” says, “I could be wrong now, but, I don’t think so”.
Is there any other cogent reason for linking Obamacare to student loans?
We’ve been monitoring the health care debate for weeks, but there are many other incremental changes the Obama administration wants to do to federalize more and more of what used to be the private sector. Student loans could soon be the exclusive realm of the feds.