Skip to comments.Gingrich calls Obama student loan proposal a 'Ponzi scheme'
Posted on 10/28/2011 7:10:29 AM PDT by Libloather
Gingrich calls Obama student loan proposal a 'Ponzi scheme'
By Justin Sink - 10/28/11 08:15 AM ET
Newt Gingrich said that President Obama's recently announced student loan proposal was a "Ponzi scheme."
Obama's plan would allow for easier consolidation of outstanding student loans, and would forgive outstanding balances on federal loans after 20 years of payments, rather than 25. Federal loan repayments would also be capped at 10 percent of a borrower's income, lowering payments, down from 15 percent now. The president would also begin implementing the changes next year, rather than 2014 as was currently planned.
But Gingrich says that Obama's plan lies to students "by promising to every young person, 'You won't have to pay off your student loan as a student." Instead, the former Speaker of the House says that those who benefit from the program will just "have to pay off the national debt" as taxpayers later in life.
He went on to say that the proposal was "a Ponzi scheme even by Gov. Perry's standards."
Gingrich was speaking at an education forum in New York attended by a number of Republican candidates.
Michele Bachmann also criticized the plan at the forum, saying it created a "moral hazard."
"There is a morality in keeping our financial promises, and I don't think we should push that off onto the taxpayer," Bachmann said. "The individual needs to repay and be responsible for repaying their student loan debt."
The Minnesota congressman also echoed comments by Speaker John Boehner (R-Ohio), who said Thursday he was concerned about the constitutionality of the administration's decision to change rules without congressional approval.
"I believe it is abuse of power from the executive to impose via an executive order a wholesale change in the student loan," Bachmann said.
You can pay me now or you can pay me later.
I always wondered why it was so important to Obama for the feds to take over the student loan system. Now I know. It was a long con.
The cincher is working for the government....
When I was a student, I was given the chance to reconsolidate my loan only one time and the rate was lock in at 9%. A couple of years later, when the rates dropped down, I was locked out of refinancing it, which I feel was punitive and unfair.
I am fortunate that I was able to get it paid off well before the 20-25 years so I am no longer a slave to the student loan monsters but a lot of people aren't that fortunate.