Borrowing From The Borrowers To Fund Obamacare
July 2, 2013 by Ben Bullard
As Congress fights over whether to permanently raise interest rates on Federal student loans, or to keep them level or peg them to financial markets, the Congressional Budget Office (CBO) has released a report that indicates the Patient Protection and Affordable Care Act will appropriate billions of dollars in student loan interest to subsidize the state-managed health insurance program.
According to the report, Obamacare will incur an additional $8.7 billion in interest on Federal student loans over the next ten years. The government is claiming it will save more than $60 billion by eliminating bank-based lending and administering student loans in-house, but instead of passing that savings on to borrowers, it’s breaking off a huge chunk for Obamacare.
That means the U.S. Department of Health and Human Services has found a way to bankroll the ACA on the backs of young people, regardless of whether they actively choose to buy in to Obamacare (and many have said that they won’t.)
In a sad way, though, it’s a no-harm, no-foul situation for the busted student loan program. Student entitlements have been a major factor in driving up college costs and bloating university programs for decades. Perhaps Monday’s doubling of student loan interest rates will have the same effect on the wallets of young would-be borrowers as Obamacare, passing the threshold at which it makes financial sense for them to opt in.