President Obama spent Friday talking about ways to make college more affordable. But if you think going to college is expensive now, just wait until you learn about his big plans for your college student or high school graduate–and you.
Everyone knows college student debt has piled up to Himalayan-size proportions, growing from just over $200 billion in 2012 to almost $1 trillion in 2012. That’s more than the nation’s total credit card or auto loan debt–and eight out of ten of those dollars are owed to the federal government, which has become the super shark of the student loan business.
So in May and June, as high school graduation parties were ending and schools were cleaning up from commencement, the Obama White House announced a plan to turn that mounting debt to its own advantage: and in effect turn your kids into debt zombies working for Big Government and various liberal causes.
The proposal is for a new program of debt forgiveness for students carrying federal loans — loans which for the average college grad amount to more than $23,000 and for those who attended medical or law or business school, easily run into six figures.
The real way to fix the student debt crisis is to get Washington out of the student loan business, not get it deeper in.
Those in the program would make monthly payments on their loans limited to just 10 percent of their income after taxes and living expenses, regardless of how much they owe. Then at the end of a given period, the remaining balance–no matter how huge–will all be forgiven.
Sounds too good to be true. But here’s the catch; the period of repayment is set at twenty years, but only ten years for students who decide to go to work in the public or non-profit sector (for which, as we’ve learned from the IRS scandal, no conservatives or groups disagreeing with administration policy on Israel or anything else, need apply).
The message to every college grad will be crystal clear. Rather than going to work at Alcoa or Pepsi, you can get out of debt twice as fast by working for your state’s Department of Motor Vehicles or your alma mater’s Affirmative Action Office, not to mention the Internal Revenue Service and Greenpeace–which of course is the whole idea.
The message to America’s colleges and universities is just as clear. They’ll have no incentive to lower their costs–and since 1990 the cost of attending a four-year college or university has risen four times the rate of inflation, or 300 percent–because college students will have every incentive to get as a big loan as possible that they’ll never have to pay back. In fact, the bigger the better.
Meanwhile, college curricula that are already skewed against capitalism and the private sector will get even more skewed, with students demanding degrees that prepare them for the fast track out of student debt and into a lifetime serving government, instead becoming part of a genuinely productive economy.
And the message to taxpayers is also clear. Your hard-earned tax dollars are going to be spent putting your sons and daughters into debt so we can harness them for a decade or more as public employees. Then you’ll also foot the bill when the balance comes due, because Obama wants to make sure his little army of public service zombies don’t pay tax on that forgiven debt (usually you do).
How big a bill? Barclays Bank figures Washington’s current debt forgiveness program with its more restrictive public service job requirement and a fifteen percent of income ceiling, will cost taxpayers an additional $300 billion by 2020. With Obama’s far more liberal proposal, we’ll be looking at lot more money than that.
The real way to fix the student debt crisis–and the soaring cost of college-is to get Washington out of the student loan business, not get it deeper in.
All Obama’s program needs is Congressional approval to become law. If it does, we’ll have passed one more landmark in turning the United States into a socialist country — and one more in turning our college grads into a nation of debt peons.
Historian Arthur Herman is a senior fellow at the Hudson Institutein Washington, D.C. He is author of seven books, including New York Times bestseller “How the Scots Invented the Modern World” (2001); the Pulitzer Prize Finalist “Gandhi and Churchill”(2008); “To Rule the Waves: How the British Navy Shaped the Modern World” (nominated for the UK’s Mountbatten Prize); and the highly acclaimed “Freedom’s Forge: How American Business Produced Victory in World War II,” which The Economist magazine picked as one of the Best Books of 2012. His most recent work is “The Cave and the Light: Plato Versus Aristotle, and the Struggle for the Soul of Western Civilization” (Random House 2013). Follow him on Twitter@ArthurLHerman.