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Student Loans -- Forgive and Forget
Townhall.com ^ | October 30, 2011 | Debra J. Saunders

Posted on 10/30/2011 1:32:44 PM PDT by Kaslin

One of the great things about America, President Barack Obama told students at the University of Colorado, is that no matter how humble your roots, you still have a shot at a great education. He also told students that his goal is to "make college more affordable." Alas, the president's prescription for making higher education affordable seems likely to yield the same results as his plan for curbing health care costs; that is, it is likely to drive prices higher than inflation.

The nation's next fiscal nightmare may well be a higher-education bubble.

Americans now owe more on student loans than on credit cards. As USA Today reported, America's student loan debt is expected to exceed $1 trillion this year. Rising costs have left many graduates in a deep hole. Many of last year's graduates walked away with a diploma and, on average, $24,000 in student loans. The default rate on student loans rose to 8.8 percent in 2009.

Occupy Wall Street activists have been calling for forgiveness of student loans. Congress already passed legislation proposed by Obama to cap some student loan payments at 15 percent of a graduate's discretionary income and to forgive the balance after 25 years. On Thursday, Obama pledged to lower the cap to 10 percent of discretionary income -- with forgiveness after 20 years.

What next, 5 percent and 15 years?

"And we can do it at no cost to the taxpayer," U.S. Secretary of Education Arne Duncan cooed in a statement.

"That is simply not true," responded Neal McCluskey of the libertarian-leaning Cato Institute. Taxpayers are on the hook for those loans.

Last week, McCluskey put out a paper that concluded that when government bestows more aid, institutions benefit far more than students. The College Board figured that real average tuition rose some $5,500 for public colleges and $17,800 at private institutions from 1980 to 2010, while total student aid increased comparably, by $8,165. The phenomenon predates this administration. The College Board reports that for the past decade, college tuition and fees have exceeded inflation by 5.6 percent a year. That's where McCluskey believes increased financial aid goes.

"There is no question," McCluskey wrote, "that colleges and universities have been raising their prices at a very brisk pace in recent decades, and that those increases have largely nullified aid increases."

Rush Limbaugh delights in blaming the rising price of higher education on "greedy academics." Look at the salaries that California's public universities pay administrators. The new Cal Poly, San Luis Obispo president is about to take home $50,000 more than the published maximum salary of $328,212. With federal and state student aid dollars feeding the beast, eggheads cash in.

The biggest losers are students who get sucked into colleges, because the federal loans look like free money, only to drop out of school. They get the debt but no degree. As McCluskey observed, "we give money regardless of their aptitude to do college work."

The other losers are graduates with six-figure debt and little income. The White House is working on a "Know Before You Owe" project to warn students about the cost of student loans.

As a beneficiary of a state university education and a repaid student loan, I don't want to end a program that helped me and can help others. But as with mortgages that fueled the housing bubble, there can be too much of a good thing.

The unintended consequences of the steep rise in government financial aid, McCluskey concluded, may well be "sky-high noncompletion rates and rampant tuition inflation."

In his 2005 Stanford University commencement address, Steve Jobs explained the economic factors that went into his decision to drop out of Reed College. "I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition."

He actually thought about the money; that sounds so quaint today. I am not suggesting that anyone drop out of the right school. I just want graduates to look back at their education and know in their hearts it was worth it.


TOPICS: Culture/Society; Editorial; Government; US: Colorado
KEYWORDS: colorado; obama; votebuying

1 posted on 10/30/2011 1:32:45 PM PDT by Kaslin
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To: Kaslin

Barry is an idiot. There is no such thing as a “great education” in this country anymore. A great diploma (tuition receipt) in Bitter Women Studies maybe but not a “great education”.


2 posted on 10/30/2011 1:35:43 PM PDT by FlingWingFlyer (Stop Government Greed Now!!!!)
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To: Kaslin

first bush 43 and obama bailed the unions at gm and chrysler,

now obama wants to bailout indebted college students.


3 posted on 10/30/2011 1:37:41 PM PDT by ken21
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To: Kaslin

And the student loans come from whom exactly???


4 posted on 10/30/2011 1:37:55 PM PDT by SkyDancer (Pilot: n. The Highest Form Of Life On Earth)
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To: Kaslin

If they forgive student loans, I want it retroactive to the 1970s at the very least.


5 posted on 10/30/2011 1:40:30 PM PDT by freedumb2003 (Herman Cain 2012 -- the man we need at the time we need him)
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To: Kaslin
"That is simply not true," responded Neal McCluskey of the libertarian-leaning Cato Institute. Taxpayers are on the hook for those loans.

That's the bottom line. We have to pay for their decisions.

One thing I'll remember about the Obama years will be feeling stupid for paying my bills on time.

6 posted on 10/30/2011 1:40:38 PM PDT by TwelveOfTwenty (Compassionate Conservatism? Promoting self reliance is compassionate. Promoting dependency is not.)
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To: SkyDancer

If most of these students would use their loans to attend a trade school where they could actually be prepared to get a job, I’d be fine with them.

A good trade school can teach you to be a plumber, electrician, chef, or any number of things that the public needs.

My bet is that most of the students taking out loans are studying in majors for which there is very little use.


7 posted on 10/30/2011 1:48:39 PM PDT by basil (It's time to rid the country of "gun free zones" aka "Killing Fields")
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To: FlingWingFlyer

Exactly


8 posted on 10/30/2011 1:57:07 PM PDT by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: basil

Useless liberal arts studies. Two years of a CC then a trade school or engineering school.


9 posted on 10/30/2011 1:59:03 PM PDT by SkyDancer (Pilot: n. The Highest Form Of Life On Earth)
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To: Kaslin

Just another perpetual give away to colleges/universities and their interconnected interests, at our expense. Tuition costs will NEVER go down as long as money so freely flows from us tax payers into these institutions.

At this point, we would be just as well off to totally socialize ‘higher learning’. Funny how this is the only area of the economy the liberals at these places don’t advocate being taken over by the government(because they are living quite comfortably, or becoming rich off of it).


10 posted on 10/30/2011 1:59:16 PM PDT by KoRn (Department of Homeland Security, Certified - "Right Wing Extremist")
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To: basil

I posted last month, somebody needs to hang a large banner in the OWS area:

“Borrowing 100 grand to attend a name college to get a degree that qualifies you to work at Starbucks is stupid.”


11 posted on 10/30/2011 2:03:19 PM PDT by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: basil

I posted last month, somebody needs to hang a large banner in the OWS area:

“Borrowing 100 grand to attend a name college to get a degree that qualifies you to work at Starbucks is stupid.”


12 posted on 10/30/2011 2:03:38 PM PDT by nascarnation (DEFEAT BARAQ 2012 DEPORT BARAQ 2013)
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To: Kaslin
What those of us in the real world know.. lots of "students" have no intention of really going to school...they sign up..get fed loans.. get Pell and state aid and when the checks roll in they take the cash and run... we also know even some that THINK they can do college..take aid and loans only to discover they should have worked at walmart ...then there are the ITT type students where if you are walking and breathing will admit you.. more of our money down the drain..

My kids all celebrated the day they made their last loan payment .. too bad barry wants to steal that sense of completion from others

13 posted on 10/30/2011 2:04:28 PM PDT by RnMomof7
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14 posted on 10/30/2011 2:05:24 PM PDT by DJ MacWoW (America! The wolves are here! What will you do?)
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To: freedumb2003
If they forgive student loans, I want it retroactive to the 1970s at the very least.

Forget retroactive. I want mine now, so that I can have it forgiven.

I worked my butt off to pay my way through college, and graduated in the late 70's recession with an engineering degree and no debt, and multiple job offers.

I want to be able to party instead for 4 years, sleep through classes and get a useless degree, then complain because I can't get a job that doesn't require any real effort. Then, I'll go hang out with my friends, errr... "protest" and have my debt paid off by taxpayers.

15 posted on 10/30/2011 2:12:09 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: nascarnation
I posted last month, somebody needs to hang a large banner in the OWS area:

I'll suggest another banner:

Welcome to Obamaville

Spread the meme....

16 posted on 10/30/2011 2:14:12 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: FlingWingFlyer

“. A great diploma (tuition receipt) “

Wow. That is the best description of a diploma I’ve ever heard! Colleges once were accused of being diploma mills but now they are just money mills and those diplomas are nothing but Tuition Receipts.


17 posted on 10/30/2011 2:18:04 PM PDT by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
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To: ken21
Actually the credit goes to the the rats.

The requests were made just prior to the 2008 elections and hustled through with no rhyme or reason. President Bush conferred with Obama prior to signing the bill. Had Bush vetoed, the Congress had enough to veto and push it through anyway.

18 posted on 10/30/2011 2:23:08 PM PDT by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: KoRn

“Just another perpetual give away to colleges/universities and their interconnected interests, at our expense. Tuition costs will NEVER go down as long as money so freely flows from us tax payers into these institutions.”

“At this point, we would be just as well off to totally socialize ‘higher learning’. “

They are well on their way to that. Debt slavery for the middle class schmucks that save or work their way, and the free ride to Ozero Zombies. The coming generations won’t have the freedom to learn if they are capable or smart. The party, meaning the liberals with a choke hold on the colleges, will decide who is worthy.


19 posted on 10/30/2011 2:38:27 PM PDT by TruthConquers (Delendae sunt publicae scholae)
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To: Kaslin
Fair is Fair.

If after 20 years you still haven't paid off your student loan, you should surrender your diploma. And your employer should be made aware of this and have the option to terminate you without cause.

And fair is fair - if I, as a taxpayer, have to pay for your college, where's MY diploma?

20 posted on 10/30/2011 2:40:38 PM PDT by ZOOKER ( Exploring the fine line between cynicism and outright depression)
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To: Kaslin

sort of a poetic justice in student loan forgiveness: the “education” isn’t worth the paper the diploma’s printed on.


21 posted on 10/30/2011 2:43:56 PM PDT by the invisib1e hand (...then they came for the guitars, and we kicked their sorry faggot asses into the dust)
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To: Kaslin
The nation's next fiscal nightmare may well be a higher-education bubble.

It certainly is a social nightmare - a generation of over-credentialed self-worshipping layabouts.

22 posted on 10/30/2011 2:53:24 PM PDT by the invisib1e hand (...then they came for the guitars, and we kicked their sorry faggot asses into the dust)
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To: basil
My bet is that most of the students taking out loans are studying in majors for which there is very little use.

I would have agreed with you just a few months ago, but I've been talking to my students at our cheap community college. Virtually all of them are taking student loans even though the annual cost of attending college is around $5,000 per year. 40 hours @ $8 per hour, you only have to work 16 weeks to make enough to pay for college (not including living and transportation expenses ... just tuition books, and fees).

The money is too easy to obtain and too loosely controlled for most students to refuse. I don't blame them for grabbing what seems to be a good deal. I DO blame them for not figuring out the real cost ... and I make a point in my classes to ensure they know what those costs will be.

23 posted on 10/30/2011 2:56:15 PM PDT by Stegall Tx (Living off your tax dollars can be kinda fun, but not terribly profitable.)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks Kaslin.
...prescription for making higher education affordable seems likely to yield the same results as his plan for curbing health care costs; that is, it is likely to drive prices higher than inflation.

24 posted on 10/30/2011 3:15:27 PM PDT by SunkenCiv (It's never a bad time to FReep this link -- https://secure.freerepublic.com/donate/)
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To: Stegall Tx

You are probably one of very few that are informing your students about what their costs are going to be t pay back time.......


25 posted on 10/30/2011 3:16:14 PM PDT by basil (It's time to rid the country of "gun free zones" aka "Killing Fields")
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26 posted on 10/30/2011 3:55:18 PM PDT by RedMDer (Forward With Confidence!)
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To: Kaslin

Actually, today’s college experience is like an extention of high school.

It is a terrible waste of time and money to live in a dorm or peer filled residence, partying with peers and attending classes with no engagement in the working adult world (experience and networking) while the student choses to go into debt. It is social and personal growth stunting for a young adult.

It is especially bad for young adults who don’t have connections for jobs when they get out of college and have nothing to offer but general college degrees and the socialization of a dorm rat. It is wrong to go to college and live on debt. But you really don’t find that out until you get out of college because reality is delayed.

Absent a rich daddy to pay for one’s college and upkeep, middle class students adopted a rich bank to loan them money with interest. They live the same as the spoiled rich kid - until they get out of college and are saddled with the debt to pay back and don’t have a rich daddy to help with job networks.

All this allows colleges to keep raising the costs and be unserious in education because student money appears to have no limit. If they were earning their own money, colleges would be pressured to keep costs and course offerings reasonable. If this college loan bubble bursts, daddy banksters should hold the bag for abetting a dysfunctional situation. Like giving mortgage loans to poor people...


27 posted on 10/30/2011 4:32:43 PM PDT by SaraJohnson
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To: Kaslin

It is interesting how much college tuition inflation resembles medical cost inflation. And both probably track perfectly with the federal government moving into the picture and subsidizing things.


28 posted on 10/30/2011 4:43:49 PM PDT by Yardstick
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To: Kaslin
Quick solution: have the colleges be the loan issuer. If the student defaults, the college loses the money. Then make student loans again be discharged in bankruptcy.

Really suddenly, colleges will stop admitting students who are not college material, and will stop offering useless majors.

29 posted on 10/30/2011 4:49:55 PM PDT by PapaBear3625 (Civilization is unnatural. It is a whim of circumstance. Barbarism must always ultimately triumph.)
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To: SaraJohnson

>>It is a terrible waste of time and money to live in a dorm or peer filled residence, partying with peers and attending classes with no engagement in the working adult world<<

That has been college forever. The difference is that today it can be extended next to forever and kids pursue diplomas in useless and sometimes harmful lefteral arts degrees like black womyns studies. That combined with the expectation that all of them are above average while performing below average is where the mess really is.


30 posted on 10/30/2011 5:10:14 PM PDT by freedumb2003 (Herman Cain 2012 -- the man we need at the time we need him)
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To: freedumb2003

No, it was not the way it used to be. Most people had to work and get degrees. They still do - only they don’t know it until the debt bill comes due.


31 posted on 10/30/2011 5:19:24 PM PDT by SaraJohnson
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