How did Obama’s plan to let government run student loans work out?

Obama nationalized student loan administration in 2010
Obama nationalized student loan administration in 2010

I’m a free-market capitalist, so I believe that economic decision-making is best done by the people it concerns, not the people in government. If it is a decision that affects the family, let the family decide. If it’s a decision that affects the business, let the business owner decide. Obama has a different view – he thinks that government should make all of the decisions, even though government earns none of the money.

Here is an article in Investor’s Business Daily about his policy of letting the government take over student loan decision-making.

Excerpt:

A report from the Department of Education notes that the net cost of the federal government’s direct loan program is quickly heading into the red. This program, mind you, was supposed to be a moneymaker for the government, as students paid back federal loans with interest.

But as it turns out, borrowers have been flocking toward various loan forgiveness programs, by which the government will lose money, erasing gains from other loans. The report shows that the direct loan program went from a $25 billion surplus in 2012 to less than $5 billion by 2015.

A separate report says that this program ran a $36 billion deficit last year, up from $8.4 billion in 2016.

This is not how this federal loan program was supposed to work when President Obama launched it eight years ago.

In 2010, President Obama effectively nationalized student lending by cutting banks — which had been offering government-backed loans to students — out of the equation and having the government make the loans itself.

“By cutting out the middleman, we’ll save the American taxpayers $68 billion in the coming years,” Obama said when he signed this change into law. “That’s real money.”

As a result, federal student loan debt shot up from $154.9 billion in 2009 to $1.1 trillion by the end of 2017.

As everyone knows, under Obama’s big government leadership, the national debt skyrocketed from $10 trillion to $20 trillion in only 8 years. Obama ran up as much debt in his 8 years as ALL the other presidents, combined. Why? It’s simple. Because government isn’t as careful with other people’s money as people are careful with their own money. People make better decisions than government because they care about the money more – they earned it. The right people to solve an economic problem are the people in the families, and the people at the local bank branches nearby. When government takes over economic decision-making, they use other people’s money to buy the votes of people who make poor decisions.

We shouldn’t be allowing students to take 4-year vacations at taxpayer expense, so that they can learn English or Women’s Studies and then stick taxpayers with the bill. Some of those taxpayers had to study hard things like engineering and pay their own way. Some of those taxpayers had to get jobs in the trades as electricians and plumbers to pay for the bad decisions of these spoiled brats. Student loan administration should not be something for big government to control. When government decides who gets loans, students feel no pressure to study subjects and get credentials that will allow them to pay back what they borrowed. I want the banks to make the lending decisions and loan out their own money, so that they can deny people who are studying nonsense that won’t get a return.

That’s why we should never have elected a big-government liberal to be president. They make a lot of promises about how great they are with money, but it never works out. Big government is never the answer to problems that are outside of what the Constitution describes as the boundaries of government.

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