STUDENT LOAN FORGIVENESS: THE OBAMA ADMINISTRATION’S (?) ASSAULT ON THE RESPONSIBLE

5/10/13

The Obama Administration’s budget for fiscal year 2014 proposes a massive forgiveness of student loans.  Under the President’s proposal, student borrowers will be required to devote only 10% of their income after taxes and “basic living expenses”  (One wonders what is included under the definition of “basic” here; one suspects that much of what you, and certainly yours truly, would consider “extravagant” will suddenly become “basic,” but I digress.) to repayment of student debt.   After 20 years of such payments, the debt will be considered repaid, regardless of the size of the outstanding balance, and the by then middle aged borrowers will no longer have to make any payments.   One more item in the bill…if the borrower works in the public or non-profit sector, s/he will only be required to make such payments for only 10 years before the remainder of the debt is forgiven.   This is in keeping with the popular view among the intelligentsia, or at least among the bright lights of the Democratic Party, that working in the public or non-profit sector is somehow more noble than working in the private sector producing things that people want so much that they are willing to pay for them.

The Obama Department of Education says that its plan will cost the taxpayers “only” $16.4 billion through 2021.   Economists at Barclay’s, however, peg the cost at $300 billion through 2020.   Since when has a federal program come in at the low end of the range of cost estimates?   In this case, even if this miracle were somehow to be achieved, this would still be a brobdingnagian expenditure of your money to bail out people who, quite likely, have more education and higher incomes than you and almost certainly spent more on their educations than you.  I’m from the government and I’m here to help you indeed.

My views on forgiveness, or even more than token lightening, of student debt are well known to my readers; see my 5/5/13 piece TAMMY DUCKWORTH’S “ROUNDTABLE” ON STUDENT LOANS:   AIN’T THAT A KICK IN THE HEAD? and the post to which it will refer you.   The current great enthusiasm among both parties to make it easier to take on, and then dump on the taxpayers, student debt is not only financially ruinous but also morally reprehensible.  Such efforts lay the foundation for further weakening the country’s financial underpinnings, punishing those who save and sacrifice for their own or their children’s educations while rewarding those who are too self-absorbed and/or lazy to do so, and transforming debt from an obligation of the borrower to an entitlement of the borrower and an obligation of someone else, usually the taxpayers and the creditors.

By now many of my readers are saying something like

“See!  It’s that damn Obama Administration and those rotten Democrats rifling through our money to reward their constituents!  Those @$##s don’t have any conception of how hard it is to earn the money they so cavalierly take away from us to spend as they see fit!”

Agreed on all counts.   The Obama Administration and the Democratic Party are spendthrift, professional politicians who are completely out of touch with what makes the country work and with the people who actually make the country work.

But…

Like so many instances of the Obama Administration’s spendthrift ways and its seemingly unceasing efforts to blow money and send the bill to those working chumps who have the temerity to act responsibly, the “pay 10% and we’ll take care of the rest” approach to student debt is a mere minor expansion of a program that started in the…

Bush administration!

By now I hope you’re not surprised at that. 

The system of basing repayment of student loans on income was incorporated into law in 2007 as a fulfillment of a Bush administration initiative; it wasn’t something that some GOPers might like you to believe was done against the objections of Mr. Bush; it was HIS, or his people's, idea.  The requirement under the Bush plan was a payment of 15% of income for 25 years, a bit more stringent than the Obama plan.   But the substance, and even the numbers, isn’t radically different.   As in most instances, the Obama administration just takes the Bush Administration’s assault on the taxpayers and rams it on home with more enthusiasm.

This tendency of the Obama Administration to just intensify the beat-down on the taxpayer and the fundamentals of our society that characterized the Bush Administration is why I have been fond, for years, of referring to the current administration as the Bush/Obama Administration.   The difference between the two administrations, to the extent there is any, is only a matter of degree, not direction or substance, as is the case with the difference between the two major parties.   In this case, both parties are bent on punishing responsibility to reward irresponsibility…and wondering why no one wants to act responsibly any more.