As a member of the higher education community, I am supposed to support any and every effort made by the feds to increase funding to college students. I do not, and I have explained my opposition to much of what Washington does in detail in previous posts. Of interest in this post is Obama’s recent executive order to cap student repayment at 10% of the borrower’s monthly income, and a bill promoted by Senate Democrats to allow 25 million borrowers to refinance their loans at lower interest rates.
College debt is a $1 trillion-plus problem, and I certainly don’t wish ill on any college students, past or present. It’s not easy facing a pile of student debt when you don’t have a job. But the federal government should not be tinkering with interest rates and payment schedules. College loans are serious business and should be enforced like any other contract. With Washington in complete charge of the student loan program, however, tossing out favors will continue to be a substantial part of the political process.
The President and his party have conditioned those with student loans to expect a constant renegotiation of terms. Many of my students tell me that they don’t actually expect to pay back everything they borrowed. If they are right, the obligation will be transferred to other taxpayers, including those who made different educational choices. While this is unfair to taxpayers, it’s not fair to students either. The lure of easy money entices some to overextend without realistic expectations for job prospects.
Senator Lamar Alexander rightly called the executive order a political stunt. Concerning the Senate bill, it’s not surprising that they Democrats propose to pay for the refinancing with a tax hike on top earners. It’s also not surprising that we’re in an election cycle.
What we’re witnessing is a dubious political cycle. The government takes over something (e.g., student loans, healthcare, etc.) because the private sector is deemed to be either incapable or unwilling to appropriately support the common good. Once politicians are in control, goodies are tossed out for political favors and ostensibly paid for by “the rich.” Anyone opposed to these favors are accused of penalizing the less fortunate. One American is pitted against another–class warfare at its finest. Taxpayers always pay for this charade in the end, but the process seems to keep the progressives in power.