The Ass With Ears intends to continue to keep loan rates for students artificially low, passing the cost of additional subsidies to the groaning taxpayer, and, in all, keeping the trillion-dollar education bubble afloat.
In his weekly address, President Barack Obama promised “to expand a program known as ‘Pay as You Earn.’ The plan allows borrowers to make payments on student loans equivalent to 10% of their discretionary income and then have any balance forgiven after 20 years – or 10 years for public-sector workers.” (WSJ)
“The federal government played a key role in helping create the more than $1 trillion in student loan debt currently being carried in the U.S,” reports Reason.com. “In 2012 the Cato Institute’s Neal McCluskey highlighted a report from the House Committee on Education and the Workforce, ‘The College Cost Crisis,’ which managed to identify that nearly 50 years of federal subsidies for higher education (beginning with the Higher Education Act of 1965) have helped along tuition inflation.”
… the “Pay As You Earn” program … caps their loan repayment at 10 percent of their income for 20 years after which the remainder is written off. (For professions such as nursing it takes only 10 years to get the write off.) In other words, students take loans according to their needs, and repay them according to their ability and hit taxpayers for the rest. The president wants to expand this socialist prescription to all students who receive federal loans.
Read about this “federally insured entitlement,” or loan socialism, here.