no third solution

Blogging about liberty, anarchy, economics and politics

Obama’s Student Loan Debt-Relief Program

October 26th, 2011

I have seen the petitions asking to forgive student loan debt, and I’m familiar that it is on the OWS list of demands, so imagine my surprise when I read a headline last night teasing that Obama has a plan to provide relief for the masses suffering under the crushing weight of massive student loan debt, which is a consequence of the rising costs of higher education, which is a consequence of the federal government’s 40+ years of meddling in higher education.

But I digress…

obama-student-loan-forgiveness

Someone else's crappy clip-art composite.

Is this “Change”?

In a nutshell, the proposal will:

  • forgive any balance after 20 years of payments (currently the limit is 25 years).
You’ll still be paying that note off when your kids are going to college. But hey, at least your debt will be gone by the time they graduate.
The proposal also will:
  • let you reduce your loan payments to 10% of discretionary income (instead of the present 15%).
At 6% interest, in order to qualify for that hardship adjustment, you’d need a balance that exceeds 2.5x your annual income, and that’s a criteria for which relatively few people will be able to qualify.
Let’s Put it in Perspective…
Someone with a calculator, who is more motivated than I am, should probably do the math on this. Experience dictates that most people are blithering idiots when it comes to dealing with numbers this large, and will buy in to just about anything if it’s a number that seems large enough.
I’m inclined to call “bullshit!”. I gave up trying to figure out the math, but I’d wager this will probably only amount to a few hundred million per year, which sounds like a lot, until you realize that the interest payment on student loans is $60,000,000,000 (that’s sixty BILLION, with a “B”).
$300,000,000 < $60,000,000,000

Which sounds like a lot, until you realize that the principal outstanding is a truly extraordinary $1 TRILLION.

$60,000,000,000 < $1,000,000,000,000

Which sounds like a lot, until you realize that Washington bailed out the banks with THREE TIMES that extraordinary amount in 2009, alone.

$1,000,000,000,000 < $3,000,000,000,000

Probably it’s just another half-assed plan to appease us, so we can go back to our materialistic, consumption-driven culture of death.

Comments

2 Comments

RSS

no third solution

Blogging about liberty, anarchy, economics and politics