Democrats went ahead with an awful plan that didn’t work out the way they expected.
Now average Americans are being forced to pay.
A terrible warning from the past should send shivers down Joe Biden’s spine.
President Joe Biden is pushing through a federal bailout of student loans at a cost of $10,000 per borrower.
He is insisting that “an entire generation is now saddled with unsustainable debt.”
“The burden is so heavy that even if you graduate, you may not have access to the middle class life that the college degree once provided,” Biden said. “Many people, many people can’t qualify for a mortgage to buy a home because of the debt they continue to carry.”
Biden added that the money would help so people “can start getting on with their lives.”
“By the way,” Biden went on, “when this happens, the whole economy is better off.”
But it’s a barefaced lie that the proposed $300 billion in spending will generate general prosperity, instead in reality it is a windfall for the government at the expense of taxpayers.
Taxpayers being on the hook for student loans was predictable from the moment the government took over student loans.
Back in 2009 and 2010 the Obama administration proposed a federal takeover of much of the student loan market. Democrats claimed that if the government took over 80% of the country’s student loans it would save everyone money and ignored the warning of the Democrat-appointed leader of the Congressional Budget Office who stated that taxpayers could be forced to repay the debt.
As the Wall Street Journal reported in 2009:
“The Obama plan calls for the U.S. Department of Education to move from its current 20% share of the student-loan origination market to 80% on July 1, 2010, when private lenders will be barred from making government-guaranteed loans. The remaining 20% of the market that is now completely private will likely shrink further as lenders try to comply with regulations Congress created last year. Starting next summer, taxpayers will have to put up roughly $100 billion per year to lend to students.”
However CBO Director Douglas Elmendorf admitted that the methodology was highly flawed and “does not include the cost to the government stemming from the risk that the cash flows may be less than the amount projected (that is, that defaults could be higher than projected),” according to the Wall Street Journal.
The Wall Street Journal added that defaults could be expected to rise since “When the government hires contractors to collect on its loans, it pays them for simply calling the borrower, regardless of the result. Private lenders, on the other hand, make money from a performing loan and have a greater incentive to do careful underwriting and aggressive collection.”
President Obama claimed at the time, “Today, we’re finally making our student loan system work for students and all of our families.”
But Democrats didn’t make a system that worked for everyone. Barack Obama failed and made taxpayers pay for his failure and Joe Biden is catastrophically adding to the failure.
If you want American Patriot Daily to keep you up to date on any new developments in this ongoing story and the rest of the breaking news in politics, please bookmark our site, consider making us your homepage and forward our content with your friends on social media and email.