Barack Obama slow jams the news.
Is there a credible, non-partisan argument for not keeping student loans cheap?
Huh? That link seems to require a paid subscription.
Hmmm… I clicked it again, it gives a random commercial and then the slow jam.
Another link:
http://2012.talkingpointsmemo.com/2012/04/obamas-pop-culture-push.php?ref=fpblg
The OP. The case for involves a) stimulus in a weak economy, b) global competitiveness, c) enhancing the US’s human capital, d) enhancing economic opportunity. The case against says that it costs money and we’d rather spend it on something else or cut taxes. The problem there is that deficits are a good thing during recession, especially since the Fed has run out of conventional ammunition for the first time sense the Great Depression. [1]
If we were in recovery, I might be more circumspect. Also, the cost of education has tended to be above inflation for the past umpteen years. Now part of that is structural: giving lectures isn’t that amenable to productivity improvements (though online learning might change that). But some suspect that subsidies for students just pads the pockets of our university system. Which happens to be the greatest in the world. Just saying.
Anyway, those are some of the issues.
[1] But a weak election year economy is in the interest of the Republican Party.
But- it isn’t really ‘spending’ or a subsidy per se. They are talking about the interest on Stafford loans (not grants), which is currently at 3.4%. The government makes money on the deal, and educates its citizens to boot. One could look at the failure to hike the interest rate as a loss of potential income, but that would be income taken from poor students who are trying to make themselves useful. Why pick on those people? If anybody deserves a cheap line of credit it is students IMHO. Raise the historically low tax rates on the wealthy before we even discuss this.
I just don’t see how there are two sides to the question without wading into the GOP interest in conditions being hard on as many citizens as possible so they can blame it on the president and get themselves reelected. And speaking of the president, can this guy be smooth and charismatic when he wants to be or what? Or will a lot of people think this kind of thing is just a cheap stunt?
I don’t think there is such an argument for making it more expensive to attend college, but you could make the argument that keeping student loans cheap allows universities to raise prices with no consequences because Uncle Sam will help with the tab. I believe that this has indeed led to some of the astronomical increase in college costs lately (even though there are certainly other factors.) I just don’t know how much laying off the subsidization of student loans will help with tuition, even though it will. If it’s a minimum impact then it wouldn’t be worth it.
-
Look: just trust the free market. Those who can’t afford to go to college can flip burgers. Sure, this is a plan for national decline. But if we’re going to have 21st century tax cuts for billionaires and the donor class, we have to make sacrifices.
-
More seriously, there are problems in our higher educational system. But jeez, if you want to reform it, put forward a proposal. Don’t just cut our students and the economy off at the knees. That smacks of irresponsible obstructionism.
- Stafford loans are available in subsidized and unsubsidized flavors. The rate on the subsidized loans are set to go up on July 1, 2012. “Subsidized loans are offered to students based on demonstrated financial need. The interest on Subsidized loans is paid by the federal government while the student is in school, during the grace period, and during authorized deferment.” So there is a budgetary cost. See #1.
Can someone explain the whole “slow jam” thing to someone who can’t bear to watch?
Is it strictly about student loans? Is it strictly about interest rates or is there a dash of forgiveness thrown in?
As for interest rates, in this financial market I don’t see any reason for rates to increase as they are scheduled to.
Thanks for the correction. Still, the subsidy amounts to letting in-need students not pay interest on their loans while they are in college, which is not exactly a wild-eyed liberal thing to do. To fight it I guess we’d want to calculate the cost of it and compare it to other items in the budget. Obama pointed out that oil companies are getting billions in subsidies too, only instead of being demonstrably “in need” they are raking in billions in profits. With examples like that it is hard to see how raising interest on student loans should be a priority IMHO.
You should watch it- it is pretty funny. The slow jam is a R&B thing. Usually it is a slow song having to do with romancing someone. You’ve probably heard it spoofed in burger commercials and other places- it is an easy target for comedy because it can make you wonder how these guys can do this and keep a straight face with all the "ohhhh yeahhh"s and goo-goo noises. Fallon and Obama are playing it for laughs too, only Obama’s little romantic dialogue is pretty much a snippet of campaign speech about student loans, spoken exactly in time to the beat of the slow jam. So, Obama is kind of making a joke out of how he is romancing college students out of their votes by offering something they want, only it is a serious policy stance at the same time.
How does the interest rate on student loans affect tuition costs? It seems that universities are raising tuition rates irrespective of the rates of student loans, because the total amount of money needed to pay for tuition is their only concern, not the additional amount of money you are paying back with the loan.
Is this a surprise for the students who currently hold subsidized loans?
If the students failed to plan ahead for a raise in the their interest rate, I doubt they will be the saviors of America as some may suggest.
It would seem to me that if we assume a limited supply of college education, then anything that increases demand would also increase tuition. Making loans more affordable would increase demand, by increasing the number of people who are able to afford tuition.
OK, then, let’s not assume a limited supply of college education. When colleges get more enrollment, they hire more teachers, and possibly even build more classroom buildings.
It’s a three minute video, with dozens, maybe hundreds, of write up all over the internet. Do your own research.
You better hope they are the saviors of America, because the next generation of college students ARE the future of the country, whether you like them or not. As such, it seems like a pretty stupid policy decision to hobble them right out of the gate.
I think it’s a stupid policy decision to subsidize student debt. To each his own. Maybe a trillion dollars in student debt isn’t a problem with mr. obama. 50% of new graduates unemployed or underemployed are proof that the current policy is a failure.
Or proof that it takes more than 3 years to fix the worst down turn since the great depression particularly when there are 40 votes in the senate whose number one goal is to make sure you don’t succeed.
If only student loan debt could be repaid in straw.
Poor attempt at being witty or a denial that people say subsidizing student loans is an “investment for the future”?
You don’t fix a down turn through economic stimulus, you prolong it.