Obamacare Is Only The First Step In America’s March Toward Government-Controlled Everything, Next Stop: College

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Higher education in the United States is headed for a rude awakening. Easy access to Federally subsidized and to more predatory private student loans has created an entire class of Americans struggling under massive piles of debt while a lagging economy provides few economically viable employment options for college graduates.

According to a recent Treasury Department statement, the amount of student loan debt owed to the Federal government has increased by 463 percent to $674,580,000,000 in the years since President Barack Obama took office. The major increase is due in part to the Health Care Education Reconciliation Act — one of the laws making up Obamacare — which essentially made it easier for students to borrow money directly from the Treasury Department on the taxpayer dime.

The law took away the power of private lenders to provide Federally guaranteed student loans through the Federal Family Education Loan (FFEL) program providing the Federal Direct Student Loan (DL) program a monopoly over the loans.

“The DL program uses a different administrative structure and draws on a different source of capital than was used in the FFEL program,” said a Congressional Research Service report published in March. “Under the DL program, the federal government essentially serves as the banker — it provides the loans to students and their families using federal capital (i.e., funds from the U.S. Treasury), and it owns the loans.”

Obama explained the law thusly when he signed the bill: “For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks to act as unnecessary middlemen in administering student loans. These are billions of dollars that could have been spent helping more of our students attend and complete college, that could have been spent advancing the dreams of our children, that could have been spent easing the burden of tuition on middle-class families. Instead, that money was spent padding student lenders’ profits.”

Obama’s move to eliminate banks from the fold in student lending is evidently working, as JPMorgan Chase & Co. announced in September that, beginning last month, it would no longer offer student loans. The biggest U.S. bank conceded that it simply couldn’t compete with the Federal government’s new lending standards and would no longer be able to realize a profit on student loans.

By steering students away from private lenders, the Federal government is accomplishing two ends under the guise of making education more affordable: 1) The easy Federal loan money encourages students to borrow more than they need and, in many cases, more than they will be able to repay. And 2) It allows colleges to continue to drive up already hyper-inflated prices as government money flows through ivory towers more rapidly and with less consequence.

But forcing private lenders out of the student loan equation is not really about the student. It’s about giving government a more concrete place in American academia than it already holds after more than five decades of providing Pell grants, subsidized student loans and an array of other entitlements targeted at students, which have driven up the cost of tuition at schools whose financial aid offices have become dumping grounds for Federal dollars.

After all, college costs have risen more than 1,100 percent since 1978, far outpacing inflation and coinciding almost directly with some of the most dramatic increases in Federal higher education spending. In just the past decade, college prices have risen by 34 percent.

Meanwhile, college degrees do not necessarily directly correlate to higher earnings or even to the ability to find gainful employment in today’s U.S. economy.

In December 2010, writing for The Chronicle of Higher Education, Richard Vedder, the director of the Center for College Affordability and Productivity, penned an article entitled “The Great College-Degree Scam.” In his work, Vedder essentially concedes that the government push for higher education has saturated the job market and forced more graduate and post graduate degree holders to take jobs for which they are overqualified and/or underpaid.

“[T]he push to increase the number of college graduates seems horribly misguided from a strict economic/vocational perspective. It is precisely that perspective that is emphasized by those, starting with President Obama, who insist that we need to have more college graduates,” Vedder writes.

The massive number of college graduates struggling to find sufficient employment account for a growing number of people defaulting on student loans

A Department of Education report on student loan repayment in September noted: “The national two-year cohort default rate [on Federal student loans] rose from 9.1 percent for FY 2010 to 10 percent for FY 2011. The three-year cohort default rate rose from 13.4 percent for FY 2009 to 14.7 percent for FY 2010.”

“The growing number of students who have defaulted on their Federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said of the report. “The Department will continue to work with institutions and borrowers to ensure that student debt is affordable. We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders—to improve college affordability for millions of students and families.”

Eventually the default rate will rise to such a level that the Federal government will announce the need for heavy-handed intervention—much like the situation that led to the Affordable Care Act’s meddling in the healthcare industry—and offer a full bailout for the more than $1 trillion in outstanding U.S. student loan debt.

The bailout and subsequent college takeover will benefit the Nation’s overeducated and unemployed at a significant cost to the greater taxpaying public. But, as with all collectivist government programs, there will be losers: In this case it will be the people paid for college, attended on merit or went to work.

Meanwhile, according to a study from the consulting company Deloitte last year, about 6 million manufacturing jobs have left the United States since 2002 and about 600,000 manufacturing jobs requiring certification or simple on the job training remain unfilled.

Personal Liberty

Sam Rolley

Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After covering community news and politics, Rolley took a position at Personal Liberty Media Group where could better hone his focus on his true passions: national politics and liberty issues. In his daily columns and reports, Rolley works to help readers understand which lies are perpetuated by the mainstream media and to stay on top of issues ignored by more conventional media outlets.

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  • Motov

    What sucks about this is the students are getting ripped off because the material taught to them, is pure liberal garbage. To learn this garbage they pay a very hefty price. The students would do better doing apprentice work, this way they gain experience which is better than having their heads filled with liberal ideas.

    • wavesofgrain

      You are so right, Motov. As a business owner for over 25 years, those with the college eds are not as good workers as those with no college ed. Older workers are much more able to comprehend and think. It is disgusting that this new common core will be focusing on things like Global Warming courses, Trayvon Martin lectures and selling Obamacare to your parents.

      This is the kind of gargage that these teachers will be indoctrinating our children with. This replaces American History and American Literature. Of course, the Union teachers love it. That means there is no hard core ‘teaching’ involved.The next generation will know nothing about the founding of our country. And you wonder why the US has fallen steadily in education ranking.

      • Motov

        I had the task of training some of these “know it all” people.
        Many are simply un trainable. They think with their expensive piece of paper, they believe they can start right from the top.

  • Warrior

    It would be very interesting to see how much is spent on foreign students, ya know, the ones that will become goobermint doctors!

  • wavesofgrain

    This is intentional to ensure the liberal indoctrination of our children. And the militant Unionized army of teachers and professors will be empowered to lay it on thick. Our culture, the foundation which our country was founded, will disappear.

    • Stuart Shepherd

      Bullseye! I call it the “academic-government complex” which has polluted our country far worse than the “military-industrial complex” Eisenhower warned of (rightly). At least with the military industrial complex there was industry!! Now we have only “political correctness” as our economic base- the lesbians and gays and lawyers and politicians and the profesors and their favored socialist groups have all the money- our money!! (And you all know I’m right, even if you think I’m too bold in the way I said it- I’m sick of them, all of them. They are arrogantly and condescendingly sociopathic! Imagine that? Colorfully illustrative examples abound, but my favorite is of Barney Frank writing all the Banking regulations (not to mention Federal housing- fannie and Freddie) while he was running a gay prostitution ring out of his apartment- which he said he was unaware of!! Even tat example is relatively innocuous compared to the outrageous corruption that abounds). The universities have no more guilt or ethical hesitation in taking huge amounts of money from students for which they pretty much know will never get a job, and with no job placement programs, than the feds do in taking our money and either giving it to themselves in one way or another , or their friends, or spending recklessly.

  • full

    obamacore, obamacare, obamamigration, obamamuslim/prayers, obama’svideo, obamalies, obamaslaves, we have to pass it to see whats in it, sounds like a stool sample (not mine) I borrowed it. ADD to the list if you like.

  • UncleB

    As the nation pursues its Empire, the peons back home realize they are eating poorly to pay for the Empire’s expansion. Now they pay top dollar for guts and gristle, bones and bouillons, soon they will graze and smoke ‘legal’, highly taxed pot to dull their pains. The American Dream, sullied by the very corporations that made it desirable. . . Come to America? The not so free land, of the less brave drone pilots, than ever before, and get screwed into McNuggets, McMansions, Hummers, wage-slavery, poorest public education ever, failing infrastructure, guns in the streets, militia-cops, 4 banger Asian cars, erratic, part time and occasional employment practices, wage slavery free of union interferences, shabby labour laws, shady business laws, But: a Lottery ticket chance of becoming a Billionaire? P.S. while you suffer this illusion of the Great Corporate American Propaganda Whores, you will eat [expletive deleted] cardboard soaked in grease, GMO’ed corn products, even graze, and die, rejected from proper medical care for lack of funds? The 1 % wait to pick your bones clean.