The Next Government Takeover: Student Loans
by Matt LewisThere has been much speculation that today’s Massachusetts Senate race is a referendum on health care. That may be an understatement. My guess is that this senate race could have even larger repercussions.
During an appearance on “Fox News Sunday,” this past week, Senate Minority Leader Mitch McConnell put it well when he said that President Obama’s plan to bring about “change” to America wasn’t merely limited to health care. As McConnell noted,
“This arrogant attempt to have the government take over one-sixth of the economy on the heels of running banks, insurance companies, car companies, taking over the student loan business, doubling the national debt in five, tripling in 10. You’ve got … sort of widespread public revulsion.”
Indeed, health care is not all that hangs in the balance. A September Wall Street Journal columnoutlined President Obama’s next move (presumably, after passing health care): A $100 billion a year government takeover of school loans.
Obama’s allies already pushed the bill through the House, and it now resides in Sen. Tom Harkin’s Senate Health, Education, Labor and Pensions (HELP) Committee, where hearings are soon to be scheduled.
What is more, a Scott Brown victory, which would deprive Democrats of a filibuster-proof majority, may still not be enough to deter the liberals from passing it.
Harkin has threatened to “fast track” the legislation by using the reconciliation process, a maneuver which would allow Democrats to pass a bill with a simple majority (as opposed to 60 votes).
Still, while a Scott Brown victory wouldn’t mathematically eliminate the possibility of a student loan takeover, it would greatly deter liberal Senators from pushing for yet another unpopular big government grab – especially via the controversial method of reconciliation.
Regardless, should Harkin and Obama succeed, all private lenders would be excluded from making government-guaranteed student loans. There will be no government-guaranteed loan option for students other than federal loans (and, as the Journal notes, “The remaining 20% of the market that is now completely private will likely shrink further as lenders try to comply with regulations Congress created last year.”)
Democrats claim the bill would save millions, but they fail to mention it will cost jobs — tens of thousands of private sector jobs — (as if we could stand to lose jobs right now). Aside from that, the bill would obviously transfer even more control from the private sector to the government.
It’s also worth pointing out that this move contradicts previous statements made by both President Obama and Senator Harkin. For example, during his September 9, 2009 speech to Congress, President Obama said, “My guiding principle is and always has been that consumers do better when there is choice and competition. That’s how the market works.”
Likewise, during a July MSNBC appearance regarding the public option, Senator Harkin said, “The one thing, I think, the people understand that we have to have is, we have to have choice and competition.”
The question, of course, is whether or not all this talk about “choice” and “competition” is just talk.
Most likely, the threat of electoral defeat will have a greater impact on whether or Senators support this bill than the need for rhetorical consistency. As such, it’s fair to say that Scott Brown’s campaign transcends even the health care debate – his victory on Tuesday could dramatically impact Obama’s entire effort to “transform” the American system. It would send a message loud and clear.
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72 Comments
" As such, it’s fair to say that Scott Brown’s campaign transcends even the health care debate – his victory on Tuesday could dramatically impact Obama’s entire effort to “transform” the American system."
It would be a blessing for the left to finally realize that we do not buy their "Progressive" nonsense any longer.
As usual Sen Harkin is full of it…..check out the stock market today,,,hopefully it is the indication of Scott Brown's win!!!
The Massachusetts Miracle
Senator Harkin said, “The one thing, I think, the people understand that we have to have is, we have to have choice and competition.”
How again is taking over 80% of the student loans AND making the other 20% nearly impossible to make financial sense for banks to offer? If this was not the government this would be illegal.
If the banks do not have another way to earn money, do you know who they have to get it from?
Well, we have known this to be the case for some time now, and is it really that surprising?
This administration wants their grubby little hand in, on, and over anything they can get away with. And, to top it all off, we got Bawny Fwank trying say that a 60 person fillibuster is un-Constitutional…Do these arrogant social climbers really want to get into a debate about Constitutionallity, on any matter? Bawny needs to stick to what he does best…Hiding his Frank in some stool…!
LOL Cowboy you beat me again….
The Conservative Edge
Joe Wilson R-SC has been right Obama from the beginning. "You Lie".
s/b right about Obama. Sorry.
it will also forever tie students- and the Left- together at the hip…
THAT's the reql agenda here. Classic Marxism, too. Separate the youth from the family, sexualize them, make them dependent on the state.
Ah, yes. Lenin, Trotsky, Alinsky- would all be proud of this lot…
I depend on student loans to help me pay for college. The ones I have now are through the government and are subsidized to a point. If the government takes over all loans, whats to stop them from letting people borrow money for majors that they want to take? I can easily see the government saying, "I'm sorry sir/ maam, but we already have enough teachers/ engineers/ scientists/ etc., your going to have to chose from the following list of majors or not go to school". Not only that, but how many other programs that the government runs have so much fraud and theft in them that they waste more than they actually use?
Amazing how some can put together talking points and vague cliches and call it an article. And pointing to a Sallie Mae petition is hardly proof that the bill would cost jobs.
Maybe this wouldn't be a topic of discussion (as if you folks wanted to "discuss" anything rationally) if the lending companies weren't so predatory on college students. They've been exposed as practicing dirty rotten schemes. I have little faith that our Congress full of corrupt Democrats and Republicans can do anything good, but a little honesty in reporting would go a long way. The lending companies became loan sharks.
Wilson might be the GOP's best bet in 2012 …
Could your loan also be canceled or defaulted if you were considered "Too Conservative" by your teachers? Loans only for the liberal intellectuals! Pardon me while I gag!
You don't come around here much do you?
Perhaps next time you can support your arguement with some facts, instead of just giving us your point of view?
Oh wait, that would require you to actually "discuss" something in a rational form. But it's all the same with your type. You accuse others of what you practice, therefore it appears that you aren't the one in the wrong. Typical……
More fiscal NONSENSE out of Tom "Red" Harkin, a true neo-communist.
Either he doesn't understand the free market or doesn't believe in it, either way this fool needs to be "retired".
We can't afford Tom Harkin anymore.
I'm a student and have student loans and have had them in the past –
if you PAY THEM BACK you don't have an issue. It's that simple. Banks I delt with were fair.
The government ISN'T the answer to everything – statist.
Great way to buy more votes from our youth and convert all future social democrats of america…..criminal…..just criminal……they should all have to work first, save, then go to school. Last time i checked, a college degree isn't worth the paper it's written on….who's hiring?? unemployment now up to 17.5% and climbing???? hmmmmm…..hmmmmmmm……hmmmmmmm
This may not be the correct place to post my comments but reading this just infuriates me to no end. To all those who call me a teabagger or some other juvenile word in an attempt to diminish the value of what I stand for, I've got news for you. Nobody has hijacked this movement, that is wishful thinking of your part in a pathetic attempt to put the movement under an 'unpopular' umbrella ie. the Republican Party.
This board is a place I began to frequent simply because it is encouraging to be around sane people! I don't come to challenge any liberal lurkers and their fu** wit comments, I can do that each and every day in life with the majority of people I come in contact with. (I do get caught up with some of them, arrggg!)
My child begins college this fall and the thought of congress dictating where she can go for loans is absurd! The loons of the left have pushed us to the breaking point and I for one believe we haven't even begun our 'fight' yet. Never thought I'd say the words, but today I wish I still lived in MA. If you've never lived there, you truly can't know what it's like.
Agreed! It is another way to get their grubby hands into the lives of our kids even further!
Do you ever remember O talking about student loans and having students work for the government as pay back? I am trying to find something on this and having a hard time looking for it.
http://www.washingtonpost.com/wp-dyn/content/arti...
Here is a link that talks about what I was wondering about earlier. I just finally found the right terms to google it. This time I will save the links as I look into it further. This is scary business really!
OK, so I'm a "statist" because I point out that the lending companies have been behaving badly? Sheesh. No, you just put words in my mouth by implying that I think the government is "the answer to everything."
And your "simple" conclusion is based solely on your one experience with loans?
Great post, but remember the "Progressive" nonsense has been going on since Marxism started. Don't forget that the "great" FDR also was a progressive too! It's been around too long to easily be beaten, I'm afraid! Also, "progressive" thought has been the theme in our schools at least since Dewey and a large portion of the so-called "educated" class in America are Progressives! In fact, since FDR, 100% of all immigrants also are from Progressive societies! We'll need more than luck I believe! It will take a miracle!
Great Post! Scary, but true and right on the mark! However, how do we STOP our Progressive Education system from spreading it's progressive agenda? I'm 62 and it has done so all my life time!
The lending companies weren't and aren't loansharks. My student loans are at 4.25% fixed. I borrowed and agreed to pay. Where is the loansharking?
Somebody gets it! Great comment!
I will admit there was a short period of time I gave a listen to bho and his hopey changey thing, God I knew we needed change. It wasn't though the system that needed changing it is and was the people we put in charge of running the system. By god we still need the change and in a far worse way.
Obama and crew are simply new crooks with a different agenda. Destroy the US no matter what we must do law we must ignore, just do it.
yeah, sure, call me names, label me, build straw men… Anyone who disagrees with you folks is a "liberal" or a "lefty" or a "socialist" or some other buzz word.
I'm not going to do your homework for you. If you're interested in the topic (rather than just venting scorn), then there's a whole wealth of information out there. Look it up. Caution: you have to step outside of the echo chamber.
Time for a complete overhaul. Starting with BHO
you apparently did not have private student loans.
well, start at the beginning. Take back the government, then the schools…
everything they are doing has the same outcome…
Yes it can and will. The University of Minnesota ( according to the Minnesota Star Tribune ) has a proposal that all Education majors must have an anti-American policy in order to get their degree.
This was according to the Minnesota Star Tribune and a post here at BIGGOV.
Who's calling you names? I'm not. The only thing I said remotely close to an insult was refering to you as "your type"
Perhaps you should read the actual words in my post, and see how they are conjugated…
Why don't you take your ignorant rage elsewhere, I'm sure there are plenty of outlets for like minded people of your sort…Besides, if you don't like it here, no one is forcing you to be here…!
THIS LINK WORKS PEOPLE!! GIVE GIVE GIVE!!
http://www.airlifthaiti.org/
[...] Had enough of the US government Chavezing their way through the federalization of, well, everything? Here come student loans. [...]
victor, I think we need to start at our local school boards and be involved in the choice of curriculum. This is a good start anyway. If we start mandating that the public system start teaching true American History, Civics, Rhetoric, and Critical Thinking, we can make a huge change in the level of our kids educations as well as training them to be critical thinkers. dcase is also correct in our need to take back the government so we can begin to implement non-ideological education on a national level.
Another option is anyone who abhors the present public system must sacrifice and seek out private education or my personal favorite, homeschooling. If more people did this there would be a major swing in the indoctrination of our youth, because we know statistically there are more Conservatives in this country than Progressives.
You called these loans "predatory" yet provide NOTHING I see as proof.
A few borrowers have chimed in saying that if you follow the guidlines of the loan there is nothing wrong with them or the system.
The current administration seems intent on breaking things that work and destroying systems that don't work. I see little in the way of "solutions" from this Obama disaster in the way of improvement.
Perhaps I'm wrong – name ONE thing better because of the Obama Administration and this Democrat Congress, just one.
The MSNBC/CNN/CBS/ABC/NBC/AP echo chamber? That one?
[...] Read more from the original source: » The Next Government Takeover: Student Loans – Big Government [...]
Yes there are plenty of places YOU get your information from: The American Progressive, Keith Olberman , Saul Alinsky, Mao, Cloward and Piven, Rachel Maddow, Che, Chavez, Castro, our educational system, just to name a few.
The problem with student loans is the jobs sent offshore to India and China during the Republican administration of George W Bush and his dimwit US Labor Secretary Elaine Chao, Mitch McConnell's wife. From 2000-2006, with Republicans in the White House and in both houses of Congress, there should have been no US jobs lost, instead of the 200K-300K jobs lost per month and lied about. If Republican tax cuts worked to create US jobs, then no one would have to draw Unemployment Benefits after 26 weeks, but cause a Republican tax cut would have created a job for that person. Common sense if you follow Republican ideology. Given offshoring, student loans should be declared null and void for all students during the Bush era.
Hilarity. It takes the government a couple months to calculate the unemployed people the the student loan regime knows to the person and social security number who has loans. What a farce.
That would be awesome if they could take over student loans. Then they would hold the power to grant loans only to those students who attend schools that support their communist agenda. Why didn't I think of that?
Thanks for that link. When the govt controls the student loans, they control WHO gets the loans and the method for paying it back. WE THE PEOPLE pick up the tab for the difference between the loan amount and the amout paid back. In addition, they will control WHAT is being taught ( for example The University of Minnesota's proposal of all Education majors having to adopt an anti-American policy in order to get their degree ).
I really feel as if a lot of people have posted comments on this blog without doing any research in the subject. The only major pitfall of nationalizing student loans is that the jobs will shift from the private sector to the public sector and frankly, for all those of you like myself who are about to finish graduate school, that's not such a bad prospect. As of now, students will continue to pay the same interest rates and the same orgination fees except instead of the government wasting tax dollars overpaying private lenders because the market interest rates have risen (something I feel the right should really consider when pondering this) the government can set their own interest rates which have always been significantly lower, especially for students who generally have little or no credit history.
I think some of you are missing the boat on the fact that these loans were already garunteed by the federal government – they are just looking to cut out the middle man. Also, it worries me that people don't realize that there are mechanism in place to protect against such heavy usurption as the federal government being able to dictate college majors, etc. Not only does federalism and states rights play a major role in this, but it would arguably be unconstitutional for the federal government to deny individual freedom to pursue an education of choice. I have to completely disagree that this is an indication of a fast dissent into Marxism or promoting a communism agenda more than it is just doing better business.
Private loans vs the FFELP/Direct Lending debate are completely unrelated; private loans aren't part of the bill nor do they anything to do with the federally funded financial aid process
The government direct loan program has been competing with the FFELP program since Clinton and has never had more than 30% of the business. There is a reason for this – not the least being the the "predatory" private lenders actually compete and buy down the student fees – which doesn't happen in the direct program.
So now that it's shown that the government can't compete, it takes over it's competition which will end up costing students more.
This is how the government competes. It's best they not be allowed in private business at all
Dear Beth,
Where do you suppose the federal government will get the dollars to fund those loans? Hint: the same place the government gets all its money: from the TAXPAYERS. Me. If you ever get out of school and go to work for a living, you. The cop. The doctor. The butcher. The baker. The candlestick maker. The barrista at Starbucks.
Why do you think it OK that everybody pay your college tuition? Pay it your ownself. The bank that originates the loan sets the loan interest rate so as to turn a profit. Congress will set loan interest rates so as to buy votes. Meanwhile, taxes go up.
From someone of the "school services" side, I work closely with colleges every day. The guarantors and lenders provide services to the students/schools that the government is not going to. They are not going to be presenting financial aid information nights to the thousands of high school students and staff, they are not going to be on site at the colleges to help them find ways to make things smoother.
INSTEAD they will be putting over 20,000 people out of work nationwide who do these services, take away the freedom to choose which loan program the school wants to work with (there is a reason that over 2/3 of the nations schools still use the FFEL Program with banks/guarantors) and they will up the national deficit another Trillion dollars within 10 years- THAT my friends is straight from the CBO's mouth!
What is the government going to do to help those of us who have worked so hard for our students, to educate them, to help them avoid Defaulting on their loans- what we will get to help US find work??? The Dept. of Education is not hiring because they know that the schools have to take what is given to them- not much service at all!
Anyone ever tried to call the Department of Ed for service?
Now students will have their loans with 5 different loan servicers- not neccessarily in the same place. The servicers cannot provide a singular report for Default Prevention purposes to the schools- so more students are going to default- this hurts the students, the schools and the taxpayers!
I didn't think I lived in a Socialist society but that's what it's turning into. I think it is rather ironic that Kennedy's seat is now held by a Republican-
THIS ONE IS FOR GEORGE MILLER:
Since you are my Congressman and you don't listen to what your constituents want: I would like to know your address. That way I know where my family will be living when we lose our home.
YOU are what gives the democratic party a bad name. Are you going to go out to High Schools 4 nights a week and teach parents and students about Financial Aid??? Because once the Guarantors are gone, they're going to need your help! Good luck with that!
Great, and I'm trying to get funding for school in the near future. I can't find any scholarships because I'm not black, or hispanic, or a woman. Apparently I was born with a silver spoon in my mouth, I've never seen it though. So now I probably won't be able to get a student loan at a good interest rate now. All the good rates will go to blacks and hispanics to get degrees in ethnic or women's studies. This country IS becoming very racist. I wasn't brought up that way, but it seems to be that ethnic minorities have declared themselves to be my enemy. I compete on merit, they compete on skin color. It is time for white student organizations, white congressional caucus, white student scholarships, white business associations, just to make a point and maybe act as a mirror for the rampant racism being perpetuated and institutionalized by our government.
Perhaps you missed the commit made by Mr Obama that the Constitution is a flawed document!?
Open you eyes, before your country is the next Cuba. Obama and friends are all communists, who do not give a damn, about what is in the Constitution. There agenda is to bring America down to the level of third world countries, since we are the evil ones who screwed up the whole world. We should now repay the whole world with our jobs and our evil, capitalist gain. They hate capitalism, which is a great part of what has made this Nation great, and given us the funds to create the colleges that the communist countries do not have. Capitalism has supported all we have and much of what other countries have. Capitalism supports the communists, they don't support themselves because they stifle productivity!
You are sadly deceived, if you think they Obama crowd won't decide who does what, or where the scholarship money, student loans should be steered.
There is no such thing as government run "better business". Can you name one gov. run program that hit the original budget? Or saved a dime. Not likely, as most do little more than hinder better business, raise costs to everyone, with much less productivity.
All these bills are not about better business, they are about control and power to run your life, and control your every thought. Your thoughts, must be the same as theirs, or you will be labeled a "tea bagger", domestic terrorist, mobster, or racist! …..
The Constitution gives the President and Congress very limited power. They have been overstepping for decades! The now in control, communist, Dems will not stop until we are no longer the USA. Communism is your future under Obama's crowd. Didn't your parents tell you to pick your friends by who they hang around? They are all anti-American! If you don't like America and capitalism, you must like communism control, ie anti freedom…marxism… what ever you want to call it, it is anti-freedom! Gov. control.
Amen Dan!
So here I am… a person who does not have the correct melanin content in my skin, or maybe I am of the wrong political stripe,or maybe I did not contribute enough to the right political candidate, but now my children want to go to college,and even though the family makes ok money we are taxed so high that even we have to go to the government for a loan…but for reasons listed above we will "not qualify".
And oh if you think the government is going to make a ton of money that the banks were making for just shuffling papers….just wait until the all the new government employees are set in place to run this monstrosity
Obama has often said he is not for reparations….THEY DO NOT GO FAR ENOUGH….look at how stimulus money has been haned out to blue districts vs red…Yes it will happen that way for education dollars too…Whitey has alot of sins to pay for in Obama's mind. Just ask Rev.Wright!
This isn't about private loans. It's about FFELP vs Direct government loans. The government direct loan program has been competing with the FFELP program since Clinton and has never had more than 30% of the business. There is a reason for this – not the least being the the "predatory" private lenders actually compete and buy down the student fees – which doesn't happen in the direct program.
So now that it's shown that the government can't compete, it takes over it's competition which will end up costing students more.
This is how the government competes. It's best they not be allowed in private business at all.
Injun Joe,
Loans are not given out based on race, creed or color instead they are based on need. Unfortunately, you have to be VERY needy to get any of the free money- grants or most scholarships.
This issue is more about the government taking over a program that for many years has been working very well on its own.
As far as getting financial aid- unless you are so bad off that you can barely make it then you will be stuck with loans. The middle class folks are not bad off enough to qualify for the free money, and are not rich enough to pay out of pocket….
Government competes by beating out the competition, then "improves" the rules. When programs don't work, BG increases fees and tightens regulations. Using efficiency as the excuse, BG could control your objective, where you attend, and what you are able to do after you obtain a degree. You might wish to attend engineering classes close to home, but be directed to attend teachers' college 800 miles away–to fill in an empty seat..
The above does not include the ideological direction you may need to take.
Yes, and what is the first thing this administration does when it gets involved in something? It injects race and class warfare. And no, you don't have to be needy to get scholarships, you just have to be the right color. That isn't the case NOW with loans, but give the government the reins, especially this government, and that is exactly what they will do. It is a pattern and they do it every time. It really isn't about color, or diversity to them, it is about power. It works to get them the votes and they will do it if given the chance.
[...] The rest is here: » The Next Government Takeover: Student Loans – Big Government [...]
Caption: This flew out of Congressman Weiner's what?
Predatory? Most of the private loans are backed by the government and are capped for the amount of interest they can charge. If someone has a student loan and its not enough to cover everything and takes out a personal loan for school then that person is responsible for the loan and the repayment terms. If the terms are more than they can handle and they still take out the loan then that is on them. I'm in school for engineering and through different programs can get enough money to go to school and not work if I have to. The government just wants to get the profits that the private company's are making because they are spending more than they are taking in.
The job losses are real. We've laid off over 100 people under the threat of this legislation. The skeleton staff remaining will all be fired as of July 1.
also, Congress sets the rates on these federal loans not the banks that participate.
IM & Beth – some facts.
Actually, the treasury raises capital like banks out on the open market. They issue T Bills. Right now the cost of those funds are low (.29%) but as China and others find other safe havens for their money the cost will go up.
Also, the banks don't set the rates on the Federal Student Loan program (Stafford Loans, PLUS Loans) Congress does.
congress will be unable to lower the rates as part of the Obama plan is to use the profits from the Federal Student Loan program to subsidized increased PELL Grants. As cost of funds increase over time they will have to raise the rates paid by students or decrease the PELL Grant subsidies.
Pure ideology of any type makes for poor policy.
Without even a momentarily blush, Obama and his banker buddies continue with their relentless shakedown of the American taxpayer. How many graduates will get jobs in this market? How many will default on their loans? Obama is bailing out his banking buddies . The public will get stuck with the bill.
This means at the minimum ,16 YEARS, FREE EDUCATION for everyone. Free College, paid for by the taxpayers.
[...] takeover” in a superb reported editorial this past September. Matt Lewis has more here; Dan Riehl has more [...]
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alena
http://grantsforeducation.info
[...] argued in favor of the Democrat’s “student loan reform bill” – a plan that (as I’ve written in the past) would result in a government takeover of the student loan [...]
[...] I’ve previously written about how bad Obama’s plan to takeover the student-loan industry [...]
[...] $80 billion.”Not only will this takeover be financially costly, Matt Lewis at Big Government argues that it will also cost us thousands of private sector jobs. At a time when only 1 available job [...]