Rarely a day goes by without one of the big news sites complaining in some form or fashion about the coming hike in the student loan percentage. It could be an elected politician, a student group, or Obama, or simply the news outlet. Like today in The Politico
Congress returns to Washington this week groping for a way to retroactively fix a high-profile doubling of some federal student loan rates.
The rate for new subsidized loans shot up from 3.4 percent to 6.8 percent on July 1 after divisions among Senate Democrats made finding a solution untenable. Now with the bright lights of the immigration bill off the upper chamber, student loan rates take center stage.
In the days since the missed deadline, Washington’s political apparatus has been a muddle of messaging. House Republicans are blasting Senate Democrats for not passing a bill as the lower chamber has done, albeit one that President Barack Obama has threatened to veto. And lawmakers from both parties are now using the #DontDoubleMyRate hashtag on Twitter, first popularized by Obama at the height of last year’s presidential campaign.
Democrats in the Senate are angling for a 1 year extension of the 3.4% rate. Why not a permanent extension? Remember this?
So, here we are — with a majority of Americans feeling distinctly un-American as a partisan takeover of health care was engineered last weekend. But do Americans realize that Congress just took over student loans as well? Unlikely.
Now, not only will government increasingly be making decisions about individuals’ health care, but students will also have to deal exclusively with the government to get the financing they need for college. The government will be in charge of the delivery of $1 trillion in federal student loans over the next 10 years. That means 19 million students will have no where to call but to 1-800-DEPT-OF-ED. — I’m sure the calls will be handled in the order in which they were received. Good luck with that. Competition and choice have been taken away in the student loan market. Let’s face it, this experiment can only end badly.
Government money has been mostly backing student loans since the 1960’s, but Obamacare went and removed the private sector in terms of payouts and funding (some claim that it completely disallows private education loans). Oh, and then there’s this
Two years ago, Obamacare was passed. As part of the unconstitutional monstrosity, the Democrats introduced a nationalization of the college student loan program which was used to boost the phony revenues the federal government will supposedly realize through Obamacare; in other words, it was a gimmick to make it look like Obamacare would reduce the deficit (long since debunked). (There’s more; read this 2010 piece by Tim Carney.)
Obamacare increased the interest percent to 6.8% in the first place as a way of increasing revenue to fund Obamacare and help the CBO score. Then, in order to patronize students with elections coming up, the rate was lowered (the gov borrows the money at 2.8% and then lends it at 3.4%? In what world does that make sense?) So the 6.8% rate was not a bug, but a necessary feature. If students want to blame anyone, they can blame Obama and the Democrats, who supported Obamacare, voted for it, signed it into law, and never bothered to read it.
As a sidebar, let’s note that The Government doesn’t restrict loans in other sectors. These same students can pay up to 24.99% in interest in North Carolina (in some small cases, 27.50%). Credit cards can be much higher than the student loan rates. Motorcycles, small business loans, etc can be at higher rates. Why are student loans treated differently? These are folks with no income and there is no guarantee that the loans will be paid back. And the taxpayer is left on the hook so that students can get a degree and in the Obamaeconomy perhaps get a low paying part time job, again thanks to Obamacare.