Student Loans Again

Yes, this is a re-run, but with all the student loan rage, I thought it might be a good time to run it again.

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The guy behind a cardboard box lets you bet that you can’t follow the pea he has hidden under one of the three paper cups on top of his box when he shuffles them around. You bet, you lose, next sucker.

I’ve been following the student loan not-a-crisis for a long time and I’ve written about it at length, although not recently. It all seems so hopeless, so useless to see.

If I, an admittedly limited and undereducated observer, could have seen this coming, why didn’t they?

The answer must be, of course, that they did see it coming and it was their intent all along. Like the southern border, they are doing these things for personal financial and personal political gain, with political party gain a side benefit. Might I suggest where the new 70,000 IRS employees could be employed? “Come here, kid.”

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Student Loans and the IRS

3–30–10

There’s nothing complicated about student loans. You already knew that, didn’t you? If you want to go to college or any number of other schools, you can save, borrow, get a scholarship or subsidy or go to work to pay the institution that grants you admission. Simple.

The health care bill eliminated banks from the student lending industry and the costs and fees they charged student borrowers. The gummint is taking over the industry, changing some of the repayment rules (to its own detriment, one should note, but that could change) and keeping the profits to pay the costs of its health care legislation. If there are any, that is, after the gummint eschews those fees and charges.

Think about it. The gummint decided to take over a (gummint-funded) private industry, renounced certain of its profit centers and intends for any remaining profits to be used to pay for its health care bill.

This requires a profound suspension of disbelief:

· First, that the gummint should supplant any private industry in a non-national security field.

· Second, that the gummint can run the industry better than the people who were already running it at a profit that could be taxed, keeping in mind that the parts that generated profits no longer exist.

· Third, that it is in the best interest of the American citizenry that gummint should compete in the private sector.

· Fourth, that the gummint won’t use its lending authority to control which students will be allowed to go to which schools.

What vital national programs has the gummint run well and within budget? Medicare, Social Security, Fannie Mae, Freddie Mac, Chrysler? Well, no. Then why should we accept that they can run student lending (or health care or anything else) better than the people who are already running it?

When someone neglects to repay a student loan, who’s going to collect the unpaid debt? The Health Care Bill, of which the Education Bill is a part, already provides for the IRS to enforce its provisions and it allows the disclosure of previously confidential tax information to health care administrators.

May I suggest that the IRS might be well-suited and amply staffed, with its new enforcement employees, to collect delinquent student loans? There are precedents. The collection of delinquent child support payments is just one. (Oh, you didn’t know about that one?)

The problem is that the IRS is very often incompetent and chronically bumbling. There were very good reasons that Congress devoted much of 1998 to investigating its massive internal failures and incompetencies.

Recently the Sacramento IRS office sent two employees to visit a local car wash because of unpaid tax of two cents (yes, $0.02) and accrued penalties and interest of a couple hundred bucks. These are the folks you want to enforce health care premiums and collect student loans?

Or have you heard differently?

Quis custodiet ipso custodes.

Juvenal

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Student Loans … Changing the Change

8–24–13

Students (as of that writing) had borrowed nearly a trillion dollars from you and they don’t want to pay it back. Why is that a problem?

We previously looked at the reformed and inferior Federal Student Loan Program on March 30, 2010, at Student Loans and the IRS. See above. Student loan reform was a bad idea then and has been implemented poorly since.

How do we know it was a bad idea? The prez told us so. He was speechifying about student loans last week. In preparation, The White House announced:

“We have to fundamentally rethink how higher education is paid for in this country.” (Thank you, The Atlantic)

But that’s what was supposed to happen in 2010. The prez was mighty proud of his student loan reform back then, part of his Patient Protection and Affordable Care Act (PPACA), Obamacare to most:

“With this bill, and other steps we’ve pursued over the last year, we are finally undertaking meaningful reform in our higher education system," Barack Obama on March 30, 2010

Mr. Obama called it “one of the most significant investments in higher education since the GI Bill.” (Thank you, Christian Science Monitor)

The prez promised us $60Bil in program savings that would be used partly fund Obamacare, part to be spent on community colleges, part for Pell Grants, part to ease stringent repayment requirements and on and on. Wow, who wouldn’t be on board with something as cool as that?

But if that had been true, why would we want to fundamentally rethink the president’s own reforms from which he promised us such miraculous results? Answer: It wasn’t true.

Here are two more answers:

1) The education reform issue was advanced to give the prez a political wedge issue;

2) It provided for the federal government to take over a profitable private sector (although admittedly publicly funded) business activity. You know, like ObamaCare usurped the health care industry.

The wedge issue is a dandy and conservatives have wilted under it.

“Hey kids, want some student loan money (stubux?)? Let me help you out there. Interest rates too high? Let’s cut them in half for a while by borrowing from Social Security. Yeah, I told you it’s bankrupt but what the hey, let’s do it anyway. (Oh, you didn’t know that?) And don’t forget, VOTE DEMOCRAT!”

Rates will go up again, of course. It’s a part of the plan that he doesn’t bother to mention.

Then comes the reason behind the reason: When the built-in failure happens, he’ll blame the Republicans and lead a crusade to “fundamentally rethink how higher education is paid for in this country.” (See above.) He’s doing it right now.

“Changing the change” might actually work if he can get enough of us to forget that the original plan was his, not the Republicans’. “Hope and Change” and all.

Reason #3: Central planning is all the vogue again. The gummint knows better than we do about everything. Therefore, we should do things the gummint way because, you know, it’s a matter of smarter people taking better care of us than we can care for ourselves. Personal responsibility morphs into “it takes a village.” Why should the private sector make a profit?

The gummint has taken over major industries on the grounds that Washington can, and therefore should, run them better than the private sector. The gummint took control of crop production during the Great Depression. Wiki notes of a Woody Guthrie song:

*In addition to being a lament for the braceros killed in the crash, the opening lines of “Deportee (Plane Wreck at Los Gatos)”:

“The crops are all in and the peaches are rott’ning, The oranges piled in their creosote dumps,” is another protest by Guthrie. At the time, government policies paid farmers to destroy their crops in order to keep farm production and prices high. Guthrie felt that it was wrong to render food inedible by poisoning it in a world where hungry people lived.

A popular refrain is “Government, stay out of my bedroom.” True that, and the exact same sentiment applies to everything else in our lives — including crop production — except for the powers and duties conferred on the federal government by the Constitution. “Stay out of my doctor’s office,” works, too.

Our Founders feared that a powerful federal government would threaten the freedom of Americans. The Constitution tells us what the government can do, but that wasn’t enough.

The Bill of Rights tells us what we can do. Nowhere is there a mention of gummint doing anything just because it feels like it. Hello, Obamacare. Oh, that’s right, it’s a tax. Who knew?

Cars, banking, health care, student loans, crony capitalism loans to politically connected fat cats for solar panels and batteries that never worked or were never competitive or never existed. Choose your industry. Which one is working better than before gummint took it over?

Next up: Gummint rates schools and directs students to the ones it thinks are best by increasing the amounts of individual student loans for them. No, really. (Thank you, BusinessWeek.)

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“The bottom line is we’re not broke, there’s plenty of money out there, it’s just that the government doesn’t have it.”

Rep. Keith Ellison (D-MN)

July 25, 2013