Obama Made $51 Billion On the Backs Of Broke College Students
It's supposed to be a good thing when the nation turns a profit on its investments (go, government!) but it's probably not so good when that profit is built on crushing debt for those who will be responsible for taking America into its economic future (boo, government).
As reported by fellow PolicyMic pundit, Alex Marin, a recent report from the Congressional Business Office shows that President Obama is poised to rake in a record $51 billion in profit from student loan borrowers; borrowers currently crushed under loan debt causing economic depression and possible future destabilization.
Let me repeat, that's $51 billion, with a B, as in Balling.
The private sector is having a hard time competing with this 'students that laid a golden egg' situation. Seriously. The folks that made the most in profit last year were our good ole earth polluting, oil baron friends over at Exxon Mobile who pulled in a cool $44.9 billion in net income, according to the Huffington Post. Apple, Inc., was second in line for gold lining pockets with $41.7 billion. That's all fine, I assume, because capitalism. (Note: Marx is making a sad face.)
HuffPost also reports that, at "$1.1 trillion, student debt eclipses all other forms of household debt, except for home mortgages." Did we learn nothing from the dot-com bubble popping? No? What about 2008? Has the housing crash taught us merely that playing with matches is dangerous, but only for others? At this point aren't we really just blowing up a bubble and waiting for the inevitable?
The sirens have sounded, but for some reason the warnings don't seem to be changing minds. Huff Post points out in a separate article that the "Treasury Department’s Office of Financial Research has identified student debt as a potential threat to financial stability, warning that excess debt could depress demand for home mortgages and dampen consumption."
To put that in layman's terms: We're broke, people! College students are broke. Recent college students are broke. Alumni over 60 still owe hundreds of billions, so they're broke too. And because of all the brokeness there is no money to buy stuff, except with more debt. And no, this is not good, in case somehow you read that and that it sounded cool.
If it's true that "students from low-income households can qualify for small loans that carry a 3.4 percent interest rate [while] the majority of borrowers and dollars lent by the government ... go to undergraduates who don’t qualify for so-called subsidized rates and are stuck paying 6.8% interest," is it really fair that banks are getting away with a "'discount rate' given by the Federal Reserve to banks, which currently stands at 0.75 percent." I doubt it.
Masslive.com reports on the new bill by Senator Warren to give students the same interest rate as banks. Claiming the "federal government is going to charge students interest rates nine times higher than the rates they charge the biggest banks — the same banks that destroyed millions of jobs and nearly broke the economy," Senator Warren is right when she says, "That isn’t right.”
President Obama, for his part, wants "the interest rate on federal loans to be pegged to market rates annually," according to Bloomberg Businessweek. That would mean current interest rates would decrease in the short term, but as the economy gains traction and climbs, the expectation that they stay low dissipates. Bloomberg notes, "Interest rates will rise as the economy improves, so some consumer groups criticize Obama’s plan for not having a cap on rates." Where's the cap, Obama? That's not right.
Maybe it's just me, but it seems to me that government should be in the business of getting America educated. Popular education, anyone? Maybe some free education? Education = educated populace = competent work force + innovation = economic growth = Good for everyone. Could it really be that simple? Nah, couldn't be. The need for profit seems to me a strange one when it comes to education. If, as a nation, we broke even on our educational investment, or limited profit to account for growth in the education sector, bureaucratic outlay and inflation, wouldn't that be smart?
Couldn't we take this $51 billion and funnel it back into our public education system and, oh, I don't know, maybe pay for everyone to get a free post-secondary education? Then we'd be as advanced a nation as, according to Wikipedia: Algeria, Argentina, Barbados, Bhutan, Cuba, Brazil, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Italy, India, Kenya, Malta, Mauritius, Morocco, Norway, Oman, Pakistan, Peru, Saudi Arabia, Scotland, Spain, Sri Lanka, Trinidad and Tobago, Turkey, United Arab Emirates, and Uruguay.
(Note: there are many others with limited or capped costs which aren't included in this list but are ridiculously less expensive than the American model.)
Seriously, is this really one area where the French are beating us? Aren't we supposed to be against the French beating us at things? I joke, of course. At the end of the day, education is important, primarily for the reception of that all important passport to [possible, and previously promised] economic success: jobs in America. Education is also important for teaching us that the world isn't as small as the communities and people we grew up around, that there's a valuable marketplace of ideas and movements we should know about, and that critical thinking skills are translatable and worth developing.
We don't want to be crushingly, permanently indebted for wanting to better ourselves and thrive in the world. The government (ahem, President Obama) should not be in the business of reaping massive profit from students' investment in the future. It's just robbing the future to pay for today.
Still, and you can blame this on youth and hope and idealism, I doubt any of us regret going to college.
Thoughts? You look like a thinker. Get at me on Twitter: @JohnathenDD