Obama's Legacy: Half Of College Students Now Expect Taxpayers To Bail Them Out

[Auburn85 430]

http://www.investors.com/politics/editorials/obamas-legacy-half-of-college-students-now-expect-taxpayers-to-bail-them-out/

 

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Student Loans: When President Obama came into the White House eight years ago, he promised a "New Era of Responsibility." It didn't work out that way, particularly for student loans, leaving President Trump with a huge mess to clean up.

In fact, when it comes to borrowing for college, students are being utterly irresponsible.

A recent survey by LendEDU of 500 current college students found that 49.8% of them think that the federal government will forgive their loans after they graduate.

"In reality," LendEDU's Mike Brown notes, "a very small percentage of graduates will even qualify for Public Service Loan Forgiveness. It is worrisome that current students may be over-borrowing on the hope that their student debt will be forgiven in the future."

Worrisome, indeed, particularly given that the amount federal student loan debt is currently $1.3 trillion, and rising fast.

Of that, $31 billion is seriously delinquent — meaning that debtors are at least 90 days past due on their payments. In fact, at 11.2%, the delinquency rate on student loans is 57% higher than credit card debt, and nearly four times the rate of all loans combined.

For the most part, it is President Obama who is to blame for this mess. One of his first actions as president was to nationalize the student loan program, cutting out private lenders and instead having the government lend directly to students.

As a result, direct lending went from 21% of federal student aid in 2009 to 73% today, and the total amount of student loan debt on the federal books doubled in eight years.

At the same time, Obama made it easier for students to avoid paying back the full cost of those loans, and repeatedly spoke as if students were victims who deserved to be protected from their own debt. In fact, Obama's "reforms" of student lending became widely known as the "Obama Student Loan Forgiveness" program.

However, the combination of making it easier to borrow and seemingly easier to avoid paying back loans created a vicious cycle. Students were more willing to borrow, and less concerned about the amount, on the assumption that they'd never had to pay it all back. Colleges used the tidal wave of new federal loan subsidies to sharply increase tuitions, which in turn forced students to take on more debt.

As a result, student loan debt accounts for 10% of all household debt, which is double its share from 2009, according to the Federal Reserve Bank of New York.

Clearly what's needed isn't more promises of debt forgiveness or easier loan terms. Instead, we need President Trump to deliver on what Obama promised eight years ago — a new era of responsibility.

That means that telling students that when they borrow money to pay for college — that is, when they invest in their own futures — they will have to pay that money back, with interest.

Reinforcing this message of responsibility will, in turn, push students to be more careful about their decisions regarding college costs, their selection of a major, and their decision about how to pay tuition.

This message won't be easy for many young people to hear. But then again, nothing worthwhile is ever easy.

 

 

[AURaptor 1,114]

Free college? Sign me up! It'll be Old School, part 2!! 

 

* on 2nd thought, no thanks. Too many fragile  ❄️ 's to deal with... 

 

[gr82be 13,653]

From someone who paid back his own loan and now my wife and I are paying back her loan, I didn't need any President to tell me to be responsible. My parents actually taught me that (shocking to some of today's parents I'm sure). I thank God I had responsible parents as an example. The concept of responsibility begins at an early age at home and continues throughout schooling. Too many people look for the easy way out of everything. Being responsible is a learned behavior.