Heritage: Obama student-loan plan leaves 29.5M out in the cold

Barack Obama’s warnings about the catastrophe that will be visited on millions of American college students if Congress doesn’t extend the temporary student interest rate reduction Democrats passed in 2007 is largely fictitious.

The Heritage Foundation  says Obama is trying to sell college students a “bag of magic beans” because the benefits of keeping current interest rates are “largely illusory”.

Extending the subsidized 3.9 percent interest rate on student loans past June 30 would only affect a fraction of the nation’s borrowers, according to former Congressional Budget Office Director Douglas Holtz-Eakin, writing in National Review’s “The Corner” .

The president’s plan would only affect 23 million loans being directly borrowed from the federal government. Student loans borrowed through private banks would remain unaffected — leaving 29.5 million Americans out in the cold.

And not even all of the federal loans would be covered if Congress were to agree to the president’s proposal because only approximately 9.5 million loans being borrowed through the subsidized Stafford loan program would be touched.

Additionally, Holtz-Eakin argues that the average student borrower would scarcely notice the difference in what they would pay each month because it would amount to an average of $7- roughly the cost of a hamburger, fries and a soft drink in some locations.

The talk about reducing the cost of student loans doesn’t even begin to address the runaway cost of paying for college. Tuition has skyrocketed alongside the growth of federal higher education spending.

For example, according to Heritage, spending on Pell grants has increased by 475 percent since 1982, yet college costs have skyrocketed by 439 percent since 1982.

Heritage expert Mike Brownfield charges that the short-term spending splurge on subsidizing interest for a fraction of the nation’s borrowers does little to make college more affordable in the long run.

Comments

Comments

  1. McIntyre says:

    I can not believe this president. Why can’t he just leave things alone, get out of subsidizing school loans, and try to find out how to lower the cost of going to school.

  2. Nathan Rogers says:

    It is a shame that those of us that actually pursue academics are going to be reduced to poverty. I am a disabled veteran, and a father of three children. I have a learning disability and had to take out my loans so I could afford to feed my family and pay for the extra expenses of school since I was struggling too much to hold down a job and stressed because my employer would barely work with me on my schedule and I had to make the choice to keep my grades up. My neighbor up the street is a convicted felon with 5 kids by 5 different baby’s mamas, a 6th grade education, and a drug addict with a Marijuana Rec. He lives in a house paid by HUD, eats groceries paid for by Food Stamps and WIC, gets money through TANF and Disability and welfare, and his kids get Breakfast and lunch free on top of all of that at their school, and they all have state medical care. His house and car are nicer than mine and he doesn’t work, doesn’t go to school, he just sits at home and plays Playstation and smokes weed all day. The sad thing is he and people like him will continue to live at a higher standard of life, stay out of debt, and live the easy life free of worries while those of us that are really trying to better ourselves and society end up struggling and sacrificing further just to dig ourselves out after getting buried in debt and interest in order to give Obama more play money to fund programs that reward the lazy on the backs of the ambitious and hardworking. Sometimes I simply ask myself what is the point in even trying when the professionally lazy, dishonest, and criminally inclined can have better access to the American dream than the law abiding and hard-working.

  3. jane says:

    It’s hard to understand why more people aren’t focused on finding ways to reduce the tuition of school. Bringing back consumer protections such as bankruptcy protection and others would help this. For me, I am unable to save money to buy a house, save money for retirement or save money for my child’s education because of my student loans. There is a whole generation of us that WON’T be sending our kids to college because of our experiences. What will the country look like in 30 years?…

  4. It is my opinion that many Americans will have to work in Federal and State jobs to pay back their student loans, resulting in many who will not be able to seek more fulfilling and creative jobs that would fully utilize their knowledge. This might be seen as some as a form of indentured servitude. The US Government should seek a solution to enable grads to fully utilize their expertise in innovation.

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