Obama Plan for Student Debt “Forgiveness” Will Only Make Things Worse
Over at The Campaign for Liberty Foundation, Michael Clayton discusses President Obama’s latest student loan “forgiveness” plan and how this will do nothing to solve the student debt crisis.
The plan will make it so that certain students with federal loans won’t have to make payments any larger than 10% of their monthly income. With the federal student debt now approaching $1.2 trillion, drastic action needs to be taken to reduce the cost of a college education, but this executive memorandum will only push the burden to the American taxpayer.
This is just Obama’s latest action to expand his “Pay as You Earn” program, which he claims will now help up to 5 million borrowers pay back their student loans, partially. After 20 years of on-time payments at 10% of your monthly income your federal student debt will be forgiven, no matter that amount you still owe. For public service workers the repayment period is only 10 years. Rest assured that this debt doesn’t just vanish into thin air. It will land squarely on the shoulders of the American taxpayer, ultimately adding to the overwhelming burden of our $17 trillion-plus national debt.
This action will not encourage responsible behavior. College students now have an incentive to borrow more money than they need, because they understand that it will not have to be paid back in full. Graduates will now be encouraged to take a job that earns less money as it will make their repayment much smaller. However, most of these young men and women do not realize that they are only “kicking the can down the road”, as they are adding on to our already insane national debt problem.