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President Obama made his first ever state of the Union speech back this last Wednesday.  And out of all the rhetoric, threats, and political manipulation going on, one thing in particular stood out to me being a young man who is trying to investigate what I am going to do for my future.

And this is what he had to say on the subject:

“To make college more affordable, this bill will finally end the unwarranted taxpayer-subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let’s tell another one million students that when they graduate, they will be required to pay only ten percent of their income on student loans, and all of their debt will be forgiven after twenty years – and forgiven after ten years if they choose a career in public service.”  Followed by even more flowery rhetoric.

Now I do support the idea of a tax credit, and no longer subsidizing banks, none of our tax money should go to affect the markets in such a way as that to make something ‘more affordable’.

I remain suspicious of the government and their intentions, but on the face of it those two things are not really so bad.  On the face of it.

But in the end this is lacking in substance because there is no guarantee that they can make this bold and ambitious plan work, on top of all the corruption that is going on with this plan.

How can they make sure of any of these programs?  Especially on the tax credits when they may tax them anyways in another area, or force taxes on someone else to pay for it which these companies will pass on to the poor consumer in question?

How about the specifics on the debt relief plan?  How is it to work? what happens if you do a year or two in public service, does that mean your debt will be forgiven, or will you have to work for all ten years?

While all this maybe just a boon to suck more people into the public system, whether they want it or not, no matter what there is that they want for their lives, which will not matter for the government that they find themselves in service too.  Maybe. I will admit this is my pet theory to this.

But then you get to the real corruption that is going on in here, the government manipulation and controls that are growing into greater and greater sectors of our economy, and giving us less choices in the end of the day.

Because the federal government has no right, none, to budge in on legitimate contracts…especially in such a case like that…and determine who and what someone else should pay for their loans.  That is of course assuming that he was not just referring to federal grants when he was talking about the ‘ten percent of income’, but the wording of the speech certainly indicated all loans when he then went on to say that the loans would be forgiven.

In basic, if that is the case, no free government has the authority to shred a contract between consenting parties and change the rules of the game.  Especially when such activity is illegal, or be met with action by the bank.

What will happen now?

You get say….a fifty thousand dollar loan…with interest.  And then lets say you sit on it, or most of that money, for 20 years or so, refuse to make payments.  The bank under such a case (or private entity) cannot take action, and then on twenty years your debt is forgiven, reset, and then you can just go on with your merry life.

Also a government does not have a right (except in theory for its own loans) how much of someone’s ‘income’ can go to pay off the debt.  Only the two parties making that agreement have the authority to do so, if either party does not agree, then they will just move on another business that can.  Or another loan option.

I certainly cannot tell someone else what to do with their own finances, or financial institutions, which might have the effect of raising the price even more in the first place.

Which brings one to the last point.  That in the end this could be all about taking away the right to a private loan, that they will set up such restrictions and regulations that in the end you will have to go to the government if you do not have the income to go to college.

Look in the end I know that about ninety percent of this is speculation.  We do not have the facts, just a vague piece of a vague speech, of a man who we know to have lied and threatened in that same speech.  I do not have the facts, but in the end all we can do is keep an eye on this potential situation and see where this takes us.  And takes our freedoms.



  1. yes….NO-bama has a bad habit of trying to pile a great many roses upon the manure he spews in hopes that we won’t smell it…:-P

    • we have a sensitive nose though 😉

  2. It sounds like to me that Obama was inferring that under his new plan ALL student loans under these new rules would only be those handled under the “government” umbrella and this would not pertain to any private loan funding sources. I do not see how the government could intrude on other creditors or consumers wanting to enter into a contract for a student loan on their own volition. However, because an independent or privately secured loan would not reap the same benefits that a government sponsored loan would this alone would eventually snuff out this part of the market for independent banks wanting to make student loans. What would be the incentive for any student to seek private loan/funding when they cannot reap the benefits of that type of loan? It would be like taking out a VA or FHA funded mortgage loan as opposed to a Conventional loan. I would see the student loan program as being patterned along the same lines. And quite frankly there are certain guidelines that you have to meet as a consumer in order to “qualify” for a VA or FHA loan therefore I would assume this new student loan program would operate in the same manner. Which makes me a bit nervous as to what that would involve and would it violate our rights or liberties?? Well immediately I would say it COULD NOT violate our rights because the new student loan provisions would have to adhere to protecting consumer rights as outlined in
    the Equal Credit Opportunity Act therefore I’m not as worried about that. What I am worried about is execution and logistics and taking away choice which ultimtely takes away our freedoms and liberties. This is the big thing…that once again the government slaps down their “BIG RED HOTEL” cornering this market…leading to one big Government Monopoly. 😦

    • government and mission creep is generally the term that we are looking for 😉

  3. A long time ago, over 12 years ago now, I took out a $16,000 Federal loan to help pay for my college tuition. I’m thankful to say my remaining balance is about $3,300.

    Now if Obama says that the government is going to forgive loans to certain people, I think our already mind-boggling deficit will get far worse. Let’s say 1 million people end up taking out Federal money to go to college, and that is a fairly realistic number given our current population. Let’s say the average loan with these 1 million people is between $10,000-$20,000. If these 1 million people were to pay off only half the total balance of their loans and the Federal government picks up the rest, it takes only some basic multiplication to see the total amount of money the government would end up spending would be in the billions.

    With a government already racking up deficit spending into the trillions, all it takes is a little arithmetic and common sense to see that we can’t afford this crap.

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