As Bad As the Democrats Can Be, Republicans Are Worse: The Student Loan Edition

It's as if Republican House Whip Eric Cantor wants to be a cartoon villain: the Daily Beast's Howard Kurtz reports, one group that Cantor is apparently fine with making pay more is American college students. Cantor, at the White House for budget negotiations, apparently proposed that students who take out student loans should immediately start paying interest, rather than getting to make payments after graduation:

As Monday's White House budget talks got down to the nitty-gritty, Eric Cantor proposed a series of spending cuts, one of them aimed squarely at college students. The House majority leader, who did most of the talking for the Republican side, said those taking out student loans should start paying interest right away, rather than being able to defer payments until after graduation. It is a big-ticket item that would save $40 billion over 10 years.

According to Kurtz, Obama rejected Cantor's proposal out of hand, saying that he didn't want to "screw students." Cantor's proposal comes at a time when American students are already overwhelmed by student loan debt. In 2008, the average debt that a college student graduated with was a whopping $23,000.

Eric Cantor is reported to have chosen "I want what I want when I want it" for his graduation high school yearbook quote. He apparently hasn't changed a bit. This is evil and stupid: if students have enough money to pay the interest, they should be using that (small) amount of money to lower the prinicipal of the loan (i.e., take out a smaller loan in the first place), not paying off interest on a larger loan.

We are ruled by sociopaths.

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Holy crap! What an evil idea. My college days were already rough and I got by barely by scrounging, particularly on those last few weeks of the semester, when I HAD to cut back on my working hours to get school work done. Adding paying interest on my loans at the same time would have made it impossible to go at all. Why doesn't Cantor go ahead and call it "Only the Rich Kids can go to College Anymore Plan."

By albanaeon (not verified) on 14 Jul 2011 #permalink

the only thing that's going to keep our economy healthy in the future is an educated workforce.

Or slave labor

By AnonymousCoward (not verified) on 14 Jul 2011 #permalink

At the risk of referring to memories: Both my parents swear that between summer jobs & working while university was in session, they could afford a state school education & repaid their loans within 1-2 years of graduation. Neither had a lot of money saved up before school & they landed average jobs afterward.

Fast forward 30 years: I went to the same university, for the same amount of time and started with one full year paid for. I worked summers & got reasonable employment after graduation. Five years later I celebrated the final payments for my loans--by which time the cost of attending the same school had gone up 20% (just a hint: wages & living costs didn't kept pace).

At best, education was cheaper for everyone 40 years ago. More likely the case: people valued education more highly and government directly contributed more towards higher education costs than it does today. Cantor is living in a dream world--he may even be having nightmares wherein he's haunted by smart people telling him he's a poor excuse for humanity.

By Always Curious (not verified) on 14 Jul 2011 #permalink

@Always Curious:

you're half right. The costs went up faster than inflation, government support declined, and with the changes in the workforce, where a college education became a necessity, it wasn't so much that people did not value education but that they valued it more. You need a BA for just about any decent job these days.

But the cost of getting one has skyrocketed to the point where it is very difficult for people to come out of school with no debt. In essence, the investment you make to get into the workforce has exceeded the reasonable rate of return.

Or, to put it that way: if the average debt is $23,000, and that represents the total investment in the education, to pay it off and still have your income go up your pay rate would have to increase by that interest rate plus inflation every year. So in order not to lose money, if the interest is 5% I have to have my employer boost my pay that much every year in addition to inflation, which would mean about 7-8% over the last decade or so. And I have to make enough money to eat without living with the parents. Good luck with that.

What you have is a luxury-priced necessity. It's really no different than when only the rich could pay for primary or secondary school.

When every senior executive draws a salary large enough to pay for a small department something is wrong.

Also, the price of anything that is not optional will expand to equal the amount of money guaranteed available to pay for it. See: rents and BAH rates for US military personnel overseas.

Itâs great that you have published such knowledge. I just hope these are all reliable. It would be better if you also include in your page the references that you are using. Thanks!

Next, he'll describe a new youth employment opportunity, where the only infrastructure investment will be in tire irons.

By Uncle Glenny (not verified) on 15 Jul 2011 #permalink

This will further class divides:

1. The kids without wealth parents must work part-time through the year.
2. The kids with wealthy parents can just focus on school and be better off.

One is a vicious cycle. The other is a virtuous cycle.

...Just as planned?

Evil? Give it a rest, will you all?

As someone who went to graduate school with most of his loans not subsidized (i.e., the interest wasn't paid while I was in school), I can tell you that it's not the end of the world. (Hint: the interest compounds until you get out.)

The interest rates are already subsized, and in-state tuition students get most of the true cost (compare in-state tuition to out-of-state tuition and you'll be shocked at the difference). So basically the people who are disproportionately headed for the higher paying jobs already are getting free money already.

So, no, taking a little of that back isn't evil. In these tough times especially, it's just common sense.

The American People need to realize that both the democrats and republicans are equally evil. They all work for the bluebloods who really run this country and others. Democrats are morons when it comes to economics and republicans are morons when it comes to human rights. Both bypass the true needs of the American People. They give American poor little bobbles and trinkets and say, "look what we have done for the little people." No matter what little facades they put up to show they are for the People, the blue bloods are the ones who continually prosper. When the economy is good it is only to fatten the sheep for the slaughter. When the economy is bad the blue bloods buy everything up for pennies on a dollar and sell it back when the economy is good again. It is a vicious cycle that if perpetuated throught the IMF and Federal Reserve (not federal and not a reserve, it is technically the world bank giving our money to extort foriegn governments.) The American People need to learn the us (D or R) against them (R or D) is designed to keep us occupied so it doesn't become us (American People) against them (government)which is the way it should be. Why do you think the government officials get such good retirement??? Hush money! It is time for a new Revolution to declare INDEPENDENCE from excessive government and let the American People decide where to spend the money!

By HeWhoKnowsAll (not verified) on 01 Aug 2011 #permalink