Obama’s Student-Loan Order Saves the Average Grad Less Than $10 a Month – The monthly impact of the president’s new effort for most Americans paying off college debt will be between $4 and $8
– by Daniel Indiviglio, The Atlantic, October 26, 2011
We could all go bonkers trying to figure out just why some people are snookered into voting for a person such as is Barack Obama, what with the abundant information available about him that contradicts his equally abundant promises that reveal he’s a Grand Master Hustler specializing in the con. We could all go bonkers trying to figure out why some people either can’t or won’t discern the essence of someone lying to them, despite the smiles and Big Do accompanying the presentations, but it’d be a waste of time. Instead of trying to figure out why some people are as this, best to continue to provide information that would enlighten others when and if possible.
Suffice it to say that there are just some people who are gullible and who refuse to learn or are not able to and it’s a waste of time to spin one’s wheels about why they persist in bowing to wrong directions and false promises that are often based upon flamboyant tableaus that, when examined more closely or even just examined at all, are discovered to be a catch-all plan by those others whose actual plans are to victimize. It’s called people being hustled, it’s called people being conned, it’s called the victimization of others by predatory personalities and it’s also called a bad deal by bad dealers.
Obama is one of those bad dealers: he’s mastered a great big presentation method at just about everyone else’s expense and it’s made possible and continues to be so because just enough people either don’t realize the penalty they’re paying or they’re paying this Big Hustler with his Big Do to rip-off others (thus, his big dollar donors, particularly in media, trained in misleading others — particularly youth — and inducing them to enjoy being misled).
Obama’s latest Big Do is his pronouncement from a podium at the University of Denver in Colorado yesterday that he’s soon to provide a “stimulus for college students,” that he’s got at the ready — and damn Congress because he doesn’t need the Constitutional assignment of Balance of Powers and considers Congress in his way, anyway, so he’s flipping-off Congress and just pronouncing some additional Big Do that manipulates our nation’s college lending system.
In doing so, Obama is not solving or resolving anything, and he’s certainly not addressing the actual problem (the shocking and continued rise in college costs). He is, instead, increasing the hardship, aiding in the pain and suffering that he is, instead, claiming to be there to assist (but isn’t). He’s avoiding addressing why education has become so costly — unions, predominantly, in all the parameters of benefits and salaries and perks, for public employees. Keeping students enrolled assists their own profit and feather-bed comforts, and promoting loans to students to do so amplifies that.
Forget for a moment that what Obama promises “soon” will not occur until after 2014, soon enough, supposedly, for him to be re-elected and wreak more havoc. So his calendare math isn’t the same as the normal person’s, but it’s his financial and economic ‘math’ that’s the biggest misrepresentation of reality:
Of the many long-term problems the U.S. economy faces, student loans are a big one. Education costs are rising very quickly and incomes aren’t. As a result, students will have to borrow more and more money to obtain university degrees and will have a tougher time paying their loans. President Obama seeks to respond to this question with an executive order in the next part of his “We Can’t Wait” unilateral stimulus effort. While the president’s heart may be in the right place, his effort isn’t like to have much impact.
The Problem: Student Loans’ Crazy Growth
The cost of college is growing rapidly. That wouldn’t be a problem if incomes were growing as quickly as tuition and fees. They aren’t. In order to cope with the growing expense of college, more students are relying on bigger loans. The chart below demonstrates the problem pretty clearly:
You can see (graph at the link) that student loans have grown by 511% since 1999. Meanwhile, disposable income has grown by just 73%. As this chart also shows, most outstanding student loan debt (82%!) was accrued by students over just the past decade.
Obama’s Executive Orders
The president seeks to make the situation a little bit easier for some of those graduates. He will create an executive order that has three components.
He will clear the way for borrowers with direct government loans and government-backed private loans to consolidate their balances. The White House estimates that this will cut the effective interest rate on student loans by up to 0.5%.
He will limit the amount of student loan payments to 10% of a graduate’s income. (Currently, the limit is 15%.)
He will allow debt still outstanding after 20 years to be forgiven. (Currently, forgiveness occurs after 25 years.)
Those last two orders are really just the president moving up the timeline of existing legislation. Both changes are set to go into effect in 2014, but the president will order that they go into effect as of 2012.
Let’s consider the impact of each of these orders.
The first would clearly be the most significant, because it is aimed at helping more student loan borrowers. How much would an interest rate reduction of up to 0.5% affect payments?
For the average borrower, the impact would be small. In 2011, Bachelor’s degree recipients graduating with debt had an average balance of $27,204, according to an analysis done by finaid.org, based on Department of Education data. That average has ballooned from just $17,646 over the past decade.
Using these values as the high and low bounds of average student debt over the last ten years, the monthly savings for the average student loan borrower would be between $4.50 and $7.75 per month. Clearly, this isn’t going to save the economy. While borrowers with bigger balances would save more, this is the average. And even someone with $100,000 in loans would only cut their monthly payments by $28.50.
As mentioned, the government already has a program for borrowers to reduce their student loan payments to a ceiling of 15% of their income. At this time, just 450,000 borrowers are participating. Clearly, all of those participants would benefit from lowering the max payment to 10%. But how many others would?*
Student loan balances have really only ballooned over the past decade. So this change would affect very few Americans over the age of 32. For the young adults who it may effect, we must remember that educational attainment has some correlation to income. Those with the most debt will have attended business school, medical school, or law school. Most of those people will also have higher incomes, making them ineligible. For a person with the average student debt load, their annual income would need to be lower than $32,000** to qualify. The average income for Bachelor’s degree holders aged 25 to 34 is $40,100.
Of all these parts of Obama’s executive order, the loan forgiveness aspect will have the least impact. By moving the timeline from 25 to 20 years, it could be significant in the long run — but it won’t be felt for decades. Remember, 82% of the current student loan debt outstanding was accrued in just the past decade. So it will be at least another 10 years before any of those borrowers have hit the 20-year mark in their student loan payments.
Can an Executive Order Really Do This?
Some opponents of excessive executive power may question whether an executive order can really even accomplish these ends. The president is ordering a policy change for loan consolidation and changing the implementation date for previously passed legislation. Either of these actions could make for a really interesting court challenge, as both appear to stretch the limits of what an executive order was designed to do — shouldn’t Congress order such changes?
In practice, however, the orders will probably go through without challenge. First, it isn’t clear that anyone who has standing to bring such a case to court would do so. The first measures may cost some private lenders some interest revenue, but they need to keep a conciliatory relationship with the government. The latter two measures would cost taxpayers. And even if such a challenge was brought, it could take the court a year or two to provide a final verdict. By then, unless a judge grants a temporary injunction, consolidation would already have occurred for most interested borrowers and the legislation’s stated implementation date would already be past for the latter two aspects of Obama’s effort.
By calling for these measures, President Obama seeks to respond directly to young Americans stressed about their student loans. Indeed, one of the vague objectives of the Occupy Wall Street movement is for student debt forgiveness. But from a practical standpoint, these executive orders won’t have much of an impact. To take on the student debt problem more aggressively, the president would need some actual legislation that would shake the fundamental framework of the student loan system. (— Continued) .
This is Barack Obama courting ongoing voter support from among gullible, college-age citizens who vote and/or who organize with others of their own age and influence. No disrespect to college-age voters but since all adult voters have been at some time in their lives “of the college-age”, those of us now past those years can look back and recall the vulnerability and impressionability and oftentimes outright neediness of that age.
So someone coming along and promising Big Do’s, especially from the national stage of the Presidency, can make a big impression: you really believe them, you follow their ideas, you really, genuinely believe they care and will help or pose an opportunity you can follow that will be beneficial.
Instead, the reality learned through life lived beyond those years teaches the survivors that those are often illusions, particularly when coming from politicians, which is sales of the most pronounced kind: promises are easy to make, fulfillment of promises rarely measures up to the sparkly quality of the presentation.
Obama is avoiding explaining to listeners that his “Stimulus for College Students” will, indeed, impact them badly. What few dollars’ helps they may experience (as above article and quote explains, something like four-to-eight dollars a month which is not going to resolve anyone’s difficulties in repaying their college loan debt), what helps they may experience will be vastly overshadowed and overwhelmed by harms to the nation’s economy, to their tax liability later (after college, when they go to work, they’ll be paying higher taxes for all those loans “forgiven” and charged to the general taxpayers, which by years after graduation will include those borrowers).
Obama’s Big Do promises have been proven — even to basic readers — to be detrimental and contrary to wellness. He erodes economic well being, he whittles away at job “opportunities” and is ensuring that his “change” to this nation is erosive to it’s existence and quality. That equals reduction of everything people of college age, whether student or not, and everyone else of all ages, lives a life reduced in quality and increased in burden and hardship. Further eroding our national economy does nothing to create increased “opportunity,” most of all jobs. Obama’s doing his best to ensure that those jobs don’t exist.
Read previous entry, too:
FUNNY AND TRUE: “WHERE OCCUPY-WALL-STREET HEADLINES COME FROM”
– from this site, October 27, 2011
Obama Taps Taxpayers For Student Stimulus
– by Chris Stirewalt, Fox News, October 26, 2011
Obama unveils student debt-relief plan – ‘Can’t wait’ for Congress, president says
– by Ben Wolfgang, The Washington Times, October 26, 2011
…The average college student now graduates owing about $24,000, and the nation´s total college loan debt now tops $1 trillion and has surpassed total credit-card debt for the first time in history.
Such high costs will likely make Mr. Obama’s plan popular among college students and recent graduates, many of whom remain shackled by debt and unable to find jobs.
But some education specialists think the administration may go even further. Richard Vedder, director of the nonprofit Center for College Affordability and Productivity, said Wednesday’s action could be a step toward total forgiveness of all student loan debt, an unprecedented action that would throw financial markets into chaos.
“That would be a disastrous move,” Mr. Vedder said. “The president’s idea just isn’t very good. I don’t know what the rationale is, other than political rationale. I don’t see it as a boost to the economy, and I don’t think it’s a help to higher education in the United States.”
Some economists believe the effort could inject more money into the economy in the short term, since less of a graduate’s monthly income will be claimed by lenders. But in the long term, Mr. Vedder said, the move could backfire by causing private lenders to raise interest rates on other loans they make or simply “scare them off” entirely.
The Education Finance Council, which represents a coalition of student finance organizations, also blasted the plan, arguing that it “does not address the real student loan problem: rising tuition and the lack of well-paying jobs.”
“I thought we were a nation of laws and that our country was governed by our Constitution. And as I have been around my district and the country this year, there’s more of an interest in our founding principles than at any time in my political career. And when you talk about the founding principles, you realize that Article I gives the Congress of the United States the power of the purse and that the president has powers under Article II, and this idea that you are just going to go around the Congress is just, it’s almost laughable. And so we are keeping a very close eye on the administration to make sure they are following the law and following the Constitution,” House Speaker John Boehner told the Laura Ingraham radio program this morning.