Is Clinton Student Loan Program Meritorious?

How long should people be paying student loans? Why did the government ban refinancing at today’s lower interest rates? Why ban student loans from being discharged in bankruptcy? The student loan program was rigged by government to benefit the lenders, the colleges, bankers, and the bureaucrats. It became such a disgrace that President Obama got away with nationalizing the 1.3 Trillion Dollar boondoggle. Sadly, except for some common sense reforms to help people who cannot pay their loans, it just changed who took the money. Students and families did not benefit greatly. How is that a surprise?

Senator Elizabeth Warren stumbled upon something that is just plain common sense. People are being forced to pay loans at 8% interest. Just let them refinance like every other borrower at today’s lower interest rates. This idea would be beneficial to taxpayers who guarantee the loans by allowing more people to make payments and pay off loans; it would help the federal budget by allowing less to be written off taxes when loan interest is deducted; and it would stop the debt bubble from growing as rapidly with the power of compounding. It is an idea that sounds right out of the Republican playbook. Why is not every Republican embracing it? Are they afraid of the finance industry lobby who owns the old loans and likes the profit they lobbied to lock in when no one was looking? Clinton is now supporting this, we must as well.

The student loan program was a Republican idea that was the brainchild of Milton Friedman and adopted by President Eisenhower. It was a direct program, but in order to expand it, it moved to a guarantee program so that it would not be an expenditure in the budget for every dollar loaned. Clinton’s husband restarted Eisenhower’s direct loan program but could not replace private lenders as he wanted. The health care bill completed that process.

Clinton proposes to reduce the interest rates on federally-backed education loans to the level at which covers the government costs, but no higher. Current borrowers would also be allowed to refinance their loans at today’s lower rates.

Clinton also proposes to expand Americorps to 250,000 slots instead of 75,000. Allow people to earn their way through valuable service that benefits the community and gives them valuable real world experience.

These are sound proposals that should not be dismissed. Only Marco Rubio seems to understand the power of this issue with half the families in America.

As Rubio pointed out, her proposal goes off the rails. Clinton thinks for profit schools are evil and wants to get tough with them. We should be encouraging, as Rubio does, the entrance of more competition and for profit schools. We need higher education that works for everyone not try to push everyone into one learning track. That is the main failure of common core.

Another problem is that she proposes to expand what Pell Grants can be used for. No longer just tuition and books but allow it be used for living expenses. That is a bad idea. It dilutes the amount available. If you need to cut living expenses, stay home and commute. We do not have an obligation to give free living expenses to every able bodied person with a pulse and a brain.

Her free public college block grants are a bad idea. I like programs like Delaware’s where students are inspired to keep a decent grade point average in order to get their free two years. 2.5 is enough to keep you focused without being a barrier. One size fits all programs eliminate state standards. It is the reason that I do not like the administration’s proposal. Making public colleges and universities univeral like public schools will lower them to the level of public schools. Yes, everyone who wants a higher education should be able to get it. We should make sure it is not handed to people who don’t want it. That will lower the value of the degree and degrade the quality of the colleges to high school atmospheres. The reason higher education works in America is that the majority want to learn.

Clinton plans to raise taxes to pay for her $350 billion program (ten year price), but does not seriously reevaluate how we spend the current $164 billion a YEAR. Rubio does that.

I give Secretary Clinton credit for starting a serious discussion on a serious issue. I hope Republicans engage because her program is thoughtful but seriously flawed. America would not be well served if it is the main basis for action.