Tag Archives: student loans

Student Loans-In Need of a Fix?

graduation

Part 2

Yesterday we talked about many of the problems inherent with student loans in our society. Today I’d like to share some common sense ideas. Do note, I’m just a mom and I’m not a professional. Also: there are plenty of websites dedicated to finding financial aid for college, do your research before starting school.

These suggestions are just a few ideas for parents of the recent high school graduate who is now wondering what to do next. The examples are real life people whose names have been changed, particularly to save the foolish ones from embarrassment.

  • Not interested in college? How about a technical program. Some are found through private programs but many are available for reasonable tuition at the community college (see next bullet). This week Lou Dobbs has a special on FNC discussing the job situation. There is a great need for skilled workers: machinists, mechanics, in the health care field, craftsmen and more. In recent years our children have been told that a four year degree is the only way to achieve quality employment. Our leaders seem to have forgotten that this country still needs to build, repair and care for both objects and people.
    • Tom had no desire to attend college but he liked working with his hands. In his town was a trade school. Tuition was less than $4,000 per year. In less than two years Tom had a certificate in tool and die manufacturing. He has had steady employment since school, paid his school loans and now bought a house.
  • Are students prepared to attend a university? Can they afford to attend a university? Community colleges in Arizona charge nearly 1/4 the tuition as the state universities. They offer freshman and sophomore courses for the student who desires to continue beyond an Associate’s Degree. If a student does not have college savings and is not eligible for scholarships or financial aid attending community college offers a great savings. Many students also choose community college for a specific degree or certificate which allows them to begin working as they continue their education.
    • Allen is attending the state university but quickly saw the downside of student loans. He attended the community college EMT program held during the summer and was able to find a hospital job where he could work and attend school. After a second summer school program he now has a benefits eligible job at the hospital and they are paying his college tuition.
    • Mary is paying for college herself. She works two part time jobs to pay for tuition while living at home. She attended community college and has now transferred to the state university. Through careful use of her money Mary has not needed student loans.
  • Are parents adequately preparing students for life beyond high school and employment? Some graduates are looking for jobs that start mid-scale or beyond. Are we parents raising the expectations unrealistically? Perhaps, we have given our children so much they expect to continue a lifestyle that used to come with time and effort. Are parents encouraging their students to get some work experience? Employers want to hire a person with known ability to handle a job. Especially, in these challenging economic times, why should an employer hire a new grad when he can get someone with years of experience?
    • I have no tales that can beat the example of this Wall Street Protester:

  • There is a great deal of scholarship money available for minority students or those looking for a particular field. Where there is great need there are often more scholarships and aid available (e.g. TEACH for America pays part of loans in return for work at rural or low income schools). Are students being encouraged to apply for scholarships? Filling out forms and answering essays can be a tedious process but the results can be very helpful. Our government also offers the generous Pell Grants to those financially eligible. They’ll cover up to 12 semesters tuition. And don’t forget that the military will pay a great deal of college costs after an honorable discharge. They also offer scholarships (in return for future service) for specific degrees. With recent cuts to the DoD the military is able to be more discriminating in who it accepts. Still, for those interested, it may be worth the effort.
    • Some parents choose to allow their student to do their own research and make all their own decisions. Personally, it seems a little parent intervention might help kids make better choices. Allowing a student to fail or miss a scholarship/financial aid opportunity may teach a point but does it help in the long run? You don’t have to be a helicopter mom, hovering all the time to remind your student of the down side to procrastination.
  • Are parents sharing some of their world experience with their college bound students? Do the students understand how interest compounds? How much less will be owed overall by paying down the principle a little each month. Just because someone is eligible for a loan to cover more than the cost of school does that mean she should take it and then use it on a shopping spree? Do you really want to be paying for those clothes for the next 20 years?  If all your costs are being paid by loans does it make sense to attend an out of state school? An Ivy League school? Is the degree at a specific school that much better than at a local school? (In Arizona annual tuition for residents is about $9,000; non-residents $22,000, while two area private schools charge between $16,000 and $22,000.)
    • An acquaintance of my daughter accrued over $96,000 in loans by her third year in college because she chose to attend an out of state school. She wanted to be a physician but couldn’t afford further debt for graduate school loans. The end result for this student was that she changed majors and applied to the nursing program expecting another two years of school.


  • And speaking of degrees, are students being encouraged to look at what kind of job their major will offer? Some businesses want to hire people with a college degree and are not picky which one. But… Where can one work with an Art History degree? Life Sciences? Philosophy? If there are jobs related to the degree are there many openings? Maybe every boy wants to be a paleontologist, but how many are there in the US?
    • Libby qualifies financially for full coverage under the Pell Grant program. Right now she wants to be a musician and is taking two or three classes each semester related to singing and writing music. At the rate she is going she will run out of Pell funds before she gets an associate degree. Additionally, no one seems to have explained the low odds of finding a job as a musician.
    • A number of my daughter’s friends wanted to be doctors. Their undergraduate degree is in Life Science. Eighty percent lost interest along the way. Some changed their major to one where they could find a job after graduation. Others got that degree in Life Science and now are discovering they are not qualified for any specific job. While some companies (e.g. UPS) merely want all their employees to have a college degree, more are looking for a specific skill set. Of the students who are now floundering, some are returning to school to become teachers while others are looking at health care field options.


  • Lastly, when looking at loans it might be a good idea to consider what income bracket your future employment will be.  Common sense should prevail, if starting salary will be less than $50K and it will cost $120,000 to attend private university, you may have a hard time paying back your loans. (Refer back to private vs state school costs.)
    • One student I know attended a private school to become a teacher. After four years she owed $100,000 in student loans and found it very hard to start paying back when her job only paid $33,000 (starting teacher in AZ at the time). She is now teaching at a Title IX school (for the loan repayment benefits) and living at home trying to get ahead.

This column has generated a great deal of interest. I will post some of your well thought comments in a conclusion later this week. I promise Part 3 will be much shorter. . .

 

Student Loans-In Need of a Fix or a Change?

graduation

Part 1

Every day we hear more tales of woe from college students who are inundated in debt due to their huge student loans.  Paying off student loans is a factor affecting lifestyle choices for many. More recently, the loans have become a larger influence on graduates, impacting decisions about home buying and even marriage.

Some believe that the sudden jump in college tuition is directly related to the government taking over the student loan program and advertising easier options for students to attend college. Is this so? There does seem to be precedence. Look at the sudden, sharp increase in house prices when so many were able to get non-principle loans through government sponsored programs. Or, the drastic rise in prescription drug costs since the implementation of Medicare Part D. There may be something to this argument. Others will point to the severe financial situation of states which forced them to cut college funding.

No matter the cause, what can be done to fix the problem?

Lower interest rates, which may help in the long run, still leave students with loans and long term repayment plans. (Interest rates for undergraduate loans were approved to remain at 3.4% for one more year in the recently passed Highway Bill effectively kicking the can down the road until after the election.)

In 2007, Public Service and Public Service Loan Forgiveness was enacted. This program allows graduates who work in the public service sector full-time for ten years and make qualifying payments during those years to have the rest of their loan forgiven.

A new House bill The Student Loan Forgiveness Act, introduced by Rep. Hansen Clarke (D-MI) offers a unique solution. The Income Based Repayment plan offers: Students pay 10% of their ‘discretionary’  salary for 10 years at which time the remainder of the loan is forgiven. As expected, this bill is wildly popular with college students, especially when so many graduates are competing with experienced unemployed workers resulting in lower pay jobs. In its current form, this bill is retroactive for those who have made qualifying payments; only available for federal loans; and places caps only on future loans.

With many government programs a fairness question causes discord among those who find themselves just outside the benefits of the potential bill. If the bill passes this year students who graduated ten years ago and paid their 10% will find their loans forgiven. Qualified students who graduated over ten years ago will also find their loans forgiven but will have paid a much larger portion of their personal debt. Students who received private loans are not eligible. And students who consolidated their loans may find their repayment plan starts over from the consolidation point.

These forgiveness programs aside, one might ask why the government is responsible for both offering student loans and for offering forgiveness? Wouldn’t it make sense just to offer college at a lesser cost? Some theorize that this is further evidence of the government wanting direct involvement in one’s life choices; including employment and housing options. Some are concerned that the commitment to work ‘for the government’ is part of a hidden socialist agenda; that the more ties one has to the government the more dependent he will be on its benefits.

Fiscal conservatives and those who want smaller government look at these forgiveness programs and ask why taxpayers are again having to foot the bill? Older generations look at today’s young graduates with disbelief. Student loans are not new but were often looked at as a hold on personal growth and something that should be paid back as quickly as possible, even if necessitating working more than one job. Many believe this generation has had high expectations give them; that they should not have to start at a beginning wage for a job. They mistakenly believe they should immediately on graduation be able to afford a new car, a new home and all the good things they grew up with but without having to wait and save as their parents did.

Tuesday, Part 2 of this article will look at some options for the new high school grad: How can a student become qualified for quality employment without wallowing in school debt and how to make common sense decisions.

Student Loan Debt: Much Ado About Nothing

obama-speech-7-SC

It is starting to get quite embarrassing for the Obama administration.  They’re trailing Romney in the polls, they’ve lost the edge with women, and his 2013 budget went down in flames in the Senate today with a final vote tally of 99-0. In the words of Sen. Minority Leader Mitch McConnell, “there’s no education in the second kick of a mule.”Not a single member of the president’s own party supports his budget and this pervasive campaign of self-martydrom should make everyone question Barry’s alleged political acumen.  His latest campaign to recapture the youth vote through anecdotes about his student loan debt will set the stage for another the next battle in the Hill that’s wholly irrelevant.

George Will aptly pointed out in his column that bipartisanship, the ideal that every American yearns to see with our political class, has created more problems that it has solved.

Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion into primary and secondary education; the McCain-Feingold speech rationing law (theBipartisan Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; continuous bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds, including most appropriations bills.

Now, with college debt becoming a salient issue, even though it’s minutae at the end of the day, Congress will haggle over the interest rate which is set to double by July 1.  Hence, the interest rate will increase from 3.4% to 6.8%.  It was cut in half only after the Democrats retook congress in the 2006 midterms and offered plan to subsidize the new rate by “disguising” the cost, as Will notes, as a $60 billion dollar program that now costs $6 billion a year would expire in five years.  Well, the grocery clerk is going to be sent to collect the bill.

In addition, the amount we’re about to fight over is a mere pittance compared to other areas of the federal budget that could be cut, reformed, or complexity dissolved.

The low 6.8 percent rate — private loans for students cost about 12 percent — was itself the result of a federal subsidy. And students have no collateral that can be repossessed in case they default, which 23 percent of those receiving the loans in question do. The maximum loan for third- and fourth-year students is $5,500 a year. The payment difference between 3.4 percent and 6.8 percent is less than $10 a month, so the “problem” involves less than 30 cents a day.

 Moreover, in a nation where the college-educated are grossly outnumbered, I agree with Will that if we are about to pump billions more into education subsidies; it should go to the underprivileged and minority students.  Although, I have my doubts about subsidies for anything.  Additionally, the overwhelmingly non-college educated taxpayers will be subsidizing a rate to keep their more fortunate citizens comfortable in college.  That just doesn’t make sense.   The unemployment rate for college graduates is below 5% and the average debt they leave with is around $25-30,000 dollars.  However, keeping in mind that the average college graduate earns $50,000 a year, it’s a highly manageable position.  Everyone is on a budget.  Nevertheless, we must keep vigilant on Republicans who could put up a soft defense, like George Bush, when this subsidy was first pitched to him five years ago.

Student Loans Seen as Next Casualty of Sluggish Economy

MINNEAPOLIS, Jan. 11, 2012 /PRNewswire/ — FICO’s quarterly survey of bank risk professionals found growing concern for the stability of the student loan market and deepening fears about the nation’s housing sector. The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), shows that bankers expect delinquencies on most types of consumer loans to rise, balances on credit cards to grow, and global economic forces to put increasing pressure on the U.S. economy.

Delinquencies on student loans causing concern

Student loan debt now exceeds credit card debt in the U.S., with experts estimating that $750 billion in student loans are outstanding. In FICO’s survey, 67 percent of respondents expected delinquencies on these loans to rise. That is 19 percentage points higher than last quarter. Only eight percent of respondents expected a decline in delinquencies.

“Evidence is mounting that student loans could be the next trouble spot for lenders,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “A significant rise in defaults on student loans would impact lenders as well as taxpayers, who could be facing big losses due to these defaults. Our survey results underscore the ongoing challenges that millions of American households face as they try to cope with their debt during these uncertain times.”

Global concerns impacting U.S. economy

Survey respondents were also asked about global issues that could put pressure on the U.S. economic recovery. When asked about the most likely trigger for a possible double dip in the U.S. economy, the Eurozone debt crisis was cited most often (38.8 percent), just edging out U.S. government policies (38.4 percent). Another 19 percent are most concerned about the lack of spending and investment by U.S. companies.

Survey respondents were also asked about the economic growth of China as it relates to the future strength of U.S. consumers. Sixty-five percent of respondents felt that the global influence of Chinese consumers would overtake that of U.S. consumers within 5-10 years. By contrast, 28 percent felt that U.S. consumers would continue to wield more influence for another 20 years or longer.

“Whether it’s debt trouble in Europe or economic growth in Asia, there are significant implications for the near-term and long-term strength and health of the U.S. economy,” said Jennings. “There are risks, challenges and opportunities all around us. To compete in this increasingly complex global environment, we’re seeing more U.S. companies embrace innovative analytic technologies to help them understand and navigate the global playing field.”

Consumer credit seen weakening, led by housing concerns

Regarding mortgages, 47 percent of respondents expected mortgage delinquencies to rise and 13 percent expected delinquencies to decrease. That is slightly more pessimistic than last quarter. When asked about credit cards, 45 percent expected delinquencies to rise while 21 percent expected a decline. That is also more pessimistic than last quarter and another sign of deteriorating confidence among bankers. In addition, 54 percent of respondents expected credit card balances to increase. These expected increases are likely due to higher spending by some consumers and financial stress for other consumers who are unable to pay down their balances.

Auto lending had a fairly balanced outlook with 33 percent of respondents expecting an increase in delinquencies, 22 percent expecting a decrease, and 45 percent expecting no change in the level of delinquencies.

Mitchell & Ray October 27th: Perry's Plan, Student Loans, Amelia Hamilton

When: Thursday,October 27th, 10pm Eastern/7pm Pacific

Where: Streaming Internet Radio

What: Join independent political commentators Rich Mitchell and Michelle Ray as they discuss Perry’s Flat Tax plan, Obama’s student loan project, and hear Obama sing.

Guest: Author Amelia Hamilton

Show Recording:

[mp3player width=300 height=100 config=mitchell_and_ray.xml file=http://media2.conservativedailynews.com/shows/mitchell-and-ray/show-10-27-11.mp3]

Non-Flash show recording

Welcome to Obama’s Nanny State

In a post for Conservative Refocus I wrote about the Obama Administration and control. There are many more examples that must be brought to the attention of the American Public. Here’s a video on some of the more spectacular medical suprises that were within the Health Care Bill which was passed and is now law.

and here are several articles on much more including general provisions, Tax changes,  marriage penalties, Menu labels for chain restaurants and vending machines,  Breastfeeding rooms, Student Loan takeover, and “Home Visits”.

In addition to the above goodies the law also contained provisions for a type of Private Army. Judge Andrew Napalitano explains:

So to recap we have a forced system of HealthCare, controlled by the Federal Government, that will provide care to illegal aliens, ration care and procedures for all,  mandate all American Citizens (as a condition of citizenship) purchase a healthcare plan, and promote euthanasia for the elderly.

This law also creates a paramilitary force, gives the President authority to control the National Guard of the individual states even absent a war. This is unprecedented and must not be taken lightly.

The nanny state provisions for “Home Visits” and mandating restaurant and vending machine labels should not be overlooked. The Obama Administration is trying to regulate every aspect of our lives. As explained by CNS News our individual BMI index is being recorded and kept in the new mandated Electronic Health Records.  Also consider Barack Obama’s Executive Order titled Establishing the National Prevention, Health Promotion, and Public Health Council with the purpose of:

(a) provide coordination and leadership at the Federal level, and among all executive departments and agencies, with respect to prevention, wellness, and health promotion practices, the public health system, and integrative health care in the United States;

(b) develop, after obtaining input from relevant stakeholders, a national prevention, health promotion, public health, and integrative health-care strategy that incorporates the most effective and achievable means of improving the health status of Americans and reducing the incidence of preventable illness and disability in the United States, as further described in section 5 of this order;

(c) provide recommendations to the President and the Congress concerning the most pressing health issues confronting the United States and changes in Federal policy to achieve national wellness, health promotion, and public health goals, including the reduction of tobacco use, sedentary behavior, and poor nutrition;

(d) consider and propose evidence-based models, policies, and innovative approaches for the promotion of transformative models of prevention, integrative health, and public health on individual and community levels across the United States;

(e) establish processes for continual public input, including input from State, regional, and local leadership communities and other relevant stakeholders, including Indian tribes and tribal organizations;

and then Sec. 5. National Prevention and Health Promotion Strategy.

Not later than March 23, 2011, the Chair, in consultation with the Council, shall develop and make public a national prevention, health promotion, and public health strategy (national strategy), and shall review and revise it periodically. The national strategy shall:

(a) set specific goals and objectives for improving the health of the United States through federally supported prevention, health promotion, and public health programs, consistent with ongoing goal setting efforts conducted by specific agencies;

(b) establish specific and measurable actions and timelines to carry out the strategy, and determine accountability for meeting those timelines, within and across Federal departments and agencies; and

(c) make recommendations to improve Federal efforts relating to prevention, health promotion, public health, and integrative health-care practices to ensure that Federal efforts are consistent with available standards and evidence.

The nanny state in writing. They will come up with legislation to force you to be healthy by overtaxation of items they are against, (cigarettes, etc) or simply outlaw it like the Progressives did with the prohibition of alcohol from 1920 to 1933.

This is a nudge. The Federal Government controls healthcare and will ration it in a Communist manner. “From each according to his abilitiy, to each according to his need.”  If you smoke, if you exceed your BMI, if you are elderly, you go to the bottom of the list for treatment or, as Obama says, “Maybe your better off not having the surgery but taking a pain pill.”

Add these provisions from the Health Care law to the provisions of the Executive Order and you can see the Nanny State forming around us, replacing liberty with a lack of options and oppressive and invasive regulations. Cities, States, and school districts have already begun to act on these provisions and more. California has been the leader banning trans fatssoda’s from schools, and  Happy Meal toys. New York has even attempted to ban salt. Massachusetts schools have begun to send home with kids “Fat Reports” in order to inform parents that their children are obese.

What would the Nanny State be without instructions? Enter Fatherhood.gov. Thats right you now have direct instructions from the Federal Government on how to be a daddy including:

Gather your already read books and donate them to a local library, school, or shelter. The books will be enjoyed again, you will reinforce to your children the value of reading, and they will gain a better understanding of the importance of giving to others.
 
Turn off the water while you brush your teeth in the morning and before bedtime. You can save up to eight gallons of water a day.
 
Many electronic devices and appliances use power even when they’re switched off or not in use. You can save money and energy by unplugging items when they aren’t being used.
 
Earth-friendly cleaning products are widely available and are kinder to our air and water. Or you can make your own cleaning supplies with white vinegar, lemons, baking soda, and other basics you probably have in your kitchen already. Check online or at your local library for the step-by-step of cleaning green.
 
Bike or walk to a park, trail, or other outdoor spot. Leaving the car at home will reduce carbon emissions and you will add exercise to your day without even trying.
 
For Father’s Day, let your family know you would like to share a family activity rather than receive gifts. Instead of collecting another tie, take photos of yourself and your children enjoying your time together. Eliminating wrapping paper and taking digital photos generate less waste on dad’s special day.
 
Take a break from the summer heat with a craft project you and your children can work on together indoors or in the shade. Gather magazines, newspapers, fabrics, and other materials that are scheduled to be thrown away and turn them into attractive and useful items such as greeting cards you can send to family and friends.
 
Visit a farmers market or farm where you can pick your own produce. Locally grown fruits and vegetables do not need to be shipped, which contributes to reducing carbon emissions. Before your trip, go online with your children to find out what is in season in your area and how you can use those items in putting together a fresh, healthy dinner menu.
 
Bring your own bag to the grocery store. You probably can pack more items per bag and many stores offer a discount for using your own bag. Repurpose old backpacks, handbags, and tote bags you already have at home.
 
Instead of buying Halloween costumes, help your children create them using items you already have at home. Or ask a group of friends to join you in swapping (recycling!) costumes the kids wore for previous Halloweens.
 
Buy compact florescent light (CFL) bulbs, which last about 5 years and use less energy. Switching just one standard bulb to a CFL can help you reduce your electricity bill by as much as 75 cents per month.
 
In 2008, Americans spent nearly $11 billion on more than 8 billion gallons of bottled water, and then tossed more than 22 billion empty plastic bottles in the trash. Instead of buying bottled water, use a water filter on your tap and keep a pitcher of filtered water in your refrigerator to fill a reusable bottle.

Welcome to Obama’s Socialist Nanny State where parents mean nothing and the state rules all. Since you can’t think for yourself the Government will provide instructions. Since you can’t keep your kids skinny we will embarass them with a “Fat Report” as we take away happy meal toys since you parents are just to irresponsible to say “No” to your children. Since you can’t eat responsibly we are just going to take everything away, no salt, no trans fat, no options for you. If you don’t get that BMI in gear “Mom” little Timmy goes to the bottom of the transplant list, but don’t worry, here’s a pain pill.

Obama Education Policy Review

School busBarackobama.com published the President’s three-part vision for education: Improve K-12, expand access to higher education, and preparing children for kindergarten.   Is this more talk from a blow-hard or is this at least one area where Obama has put some substance behind his style?

The website says that K-12 will be improved through aggressive recruiting of new teachers, new ways to reward effective teachers, and by lessening the severity of actions against schools that fail to meet standards.  20% of existing teachers are expected to retire in the next five years.  While several news articles talk about things like scholarships for “Teacher Service” and “Teacher Residency Programs”, no bill has been enacted that would provide for them.   Another portion of Obama’s teacher recruitment/retention strategy is merit pay.  However, the idea of financially rewarding good teachers does not resonate with the National Education Association (NEA) and the powerful group seems to have prevented Obama from accomplishing this portion of his plan.  Barack would also like to send teachers to lower-income areas as stipulation of subsidizing their college costs.  It is my opinion that a teacher that is forced into an area where he/she does not want to live and work will surely get them to retire quickly.  As an aside, the President’s budget for 2010 also cuts funding for classroom technology by $169 million.  Grade on k-12: all style – no substance: F.

So how is Obama doing on his push to make higher-education more accessible?  The President’s budget does have provisions to increase funding of Pell grants.  Barack’s plan will increase Pell grant maximums from $5,350 to $5,550 and indexing the grant maximum to inflation.  There is controversy in how the President intends to pay for the increase in grants.  The administration is going to cut-off subsidies to lenders that provide student loans.  The reason the subsidy is necessary is government regulations that make the student loans bring in less money than it takes to administer them.  This will most-likely result in the government take-over of the student loan market.  While the grant increase will make education more-accessible to low-income households, it will also have the affect of making college less-affordable for middle-class families that rely on student loans to finance the trip through a University.  Grade on higher-education access: he’s taken action, but appears misguided: D.

Obama also intends to improve the preparation of pre-k children for school.  The President would like to reform No Child Left Behind (NCLB).  Other than speeches on the campaign trail, speeches from the White House, and speeches by other members of his administration, there appears to be no action on this part of the Obama plan.  Barack felt that NCLB was underfunded and put too much emphasis on preparing students for standardized tests.  No mention is made in the President’s budget about NCLB, instead it talks about creating a new program based on the “Harlem Children’s Zone” initiative.  This new “Promise Neighborhood” program does not appear to have funding in the budget, so it is unclear how or if it will even be implemented.  Grade on pre-k: all talk, no walk: F

So far, all we have seen is the Obama administration doing what has been done by every previous one – throw more money into a failing system.  $8.6 Billion was given to California alone to make up for education budget shortfalls, but no new programs came with the money and no new behavior has resulted. Obama’s final grade: D-.

Massive Government Takeover on Horizon

With the 61% majority stake in GM and $85 Billion takeover of AIG complete, the liberal government has set its sights on the private student loan market and health care.

Both initiatives will cost roughly one trillion dollars each and neither one will be passed by the Senate in a traditional vote where 60 senators consent.

Health Care and student loans are on track to be voted on in a fall budgetary maneuver known as reconciliation.  This tactic only requires a simple majority and was intended to promote better fiscal discipline in the budget process.  It is clearly having the reverse affect.

The $85 Billion-a-year student loan program had been a totally government-serviced operation until consumer outrage at the poor support and absolute lack of efficiency pushed them to the private market.  So if the government did such a poor job, why is this even in consideration?

In 2007, a liberal congress legislated loan returns to a level so low that private companies could not make any money.  They just stopped writing the loans which forced consumers back into the hands of the government.  The government didn’t pause at all.  The federal programs started buying up loan assets at an alarming rate in 2008.

In the President’s budget for 20101 a section named “TERMINATION: ENTITLEMENTS FOR FINANCIAL INTERMEDIARIES UNDER THE FEDERAL FAMILY EDUCATION LOAN PROGRAM, the first sentence says it all, “The Administration proposes to eliminate unnecessary subsidies to lenders that make loans to students.”.  Obama is ending the privatized student loan industry by force.  By terminating the subsidies, that were only necessary due to the government lowering rates to unsustainable levels, there will be nowhere else to go but the government when Americans need student loans.  This strategy isn’t new, it’s the exact same one being used to sucker-punch citizens into a single-payer health care solution.  You could call it – single lender student loans.

Following their game plan to the letter, the administration is using its usual tricks of claiming “savings” and then putting plans in-place to spend the savings before they’ve materialized – as if we would be able to accurately measure these savings anyway.  Obama has planned to use the purported savings to increase Pell grant funding by almost $50 Billion.  If loan defaults increase, and they will, taxpayers will be funding the increases in Pell grants.

Recognize the basic strategy that elitists are using to gather more-and-more power to themselves and therefor strip more from states and individuals.  They predictably regulate an industry into the ground, start a government plan, create false “savings”, then run the private industry out-of-business by using anti-competitive practices.  It’s not new, it’s not right, but it is their method of operation.

Health Care and student loans will mean a two trillion dollar take over of yet another private enterprise without the constitutionally mandated 60 votes, not to mention that a federal-run student loan program may be unconstitutional.  For education and health care, we will have nowhere to go but Uncle Sam.

1- Budget of the U.S. Government Fiscal Year 2010 – Terminations, Reductions, and Savings