WSJ: Obama's Student Loan Promises 'Charade'

Image: WSJ: Obama's Student Loan Promises 'Charade' President Barack Obama speaks before signing a memorandum on reducing the burden of student loans on June 9 in the East Room of the White House.

Tuesday, 10 Jun 2014 07:05 AM

By Elliot Jager

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Democrats brought about a $1 trillion debt by growing the federal student loan program since 2007. Now they plan to pass on that burden to all taxpayers, The Wall Street Journal editorialized.

President Barack Obama — with an eye to the midterm elections — is offering additional student-loan aid through the Pay As You Earn program. He offers to limit repayments to 10 percent of discretionary income and to forgive debts entirely after 20 years, less if a borrower works for government or in the nonprofit sector.

Enrollment has already climbed by 40 percent in Pay As You Earn and similar programs. Democrats want to further ease eligibility criteria. "The program used to be closed to people who borrowed before October 2007, or who have not borrowed since October 2011," but now the president by "regulatory fiat" wants to open the program to older borrowers, as well, according to the Journal.

On top of this, Senate Majority Leader Harry Reid is pushing legislation proposed by Massachusetts Sen. Elizabeth Warren that would enable old borrowers to refinance their federal or private student loans at lower rates. That would cost the treasury $58 billion over 10 years.

Warren would ostensibly pay for it by hiking taxes on Americans earning $1 million or more. Republicans, however, will block such a proposal "before it further harms the slow-growth economy," according to the newspaper's editorial board.

Democrats want to appeal to recent college grads — 45 percent of whom were not working or were underemployed last year.

By enticing young people to take out loans regardless of their prospects to repay them, Democrats are creating "political pressure to force taxpayers" to treat student loans as a "universal federal entitlement," according to the Journal editorial.

Those who are worse off, including young people who didn't attend college, will ultimately have to pick up the tab for the Democrats' profligacy. "So the townies with jobs will end up paying more in taxes to give former college kids and grad students a break on their student debt," the Journal says.

While these Democratic proposals will never pass the Republican-controlled House, their real purpose is to redirect the national spotlight away from the VA scandal, Obamacare, and the Taliban prisoner exchange thus transforming "government failure" into "another political opportunity," the Journal concluded.

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