When I first heard about this government takeover of educational loans, I wondered but did not give it more thought. There just seems to be money shovelled to education in every bill. Where are all these highly educated folks going to get jobs in the Zero/Negative growth economy?
Green jobs don't seem to be the answer. Instead of sending jobs overseas, as an example, the Obama administration sent many billions of BATTERY stimulus money to foreign companies for research, development, factories, and jobs. More to foreigners for jobs than to domestic companies. I remember stories about a few domestic companies that didn't hear anything from the grovernment until they got their reject letter.
No outsourcing green jobs, the Obama administration will shovel billions of taxpayer dollars (deficit) directly to foreigners.Another campaign promise kept!!! 
The Quietest Trillion
"Congratulations. You're about to own $100 billion a year in student loans."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.
Hmmm...sounds a lot like healthcare...new regulations...
The system broke down after Congress in 2007 legislated a return so low that no private lenders could make money holding these assets...
Returns so low, private lenders can't compete? Is this the fate of private insurance?
It's not a popular idea on campus. Loans directly from the feds have been available for decades, but the government's poor customer service has resulted in most borrowers choosing private lenders. This week three dozen college administrators, representing schools from Notre Dame to Nevada-Reno, signed a letter urging a longer transition period to this "public option." The fear is that the bureaucrats will not be able to pull off a takeover in just eight months. "Any delay in getting funds to schools on behalf of students will result in our needing to find resources at a time when credit is difficult to obtain," warns the letter.
From memory, I seem to recall recent articles about dealers not getting 'cash for clunkers' payments, and military folks not getting their student aid on time...
I wonder how long healthcare providers will have to wait for payments? I wonder about the preference system for provider payments. Anyone know what that will look like? Who gets preference under Obamacare?
Even the unofficial number is dubious. The government has been claiming lower default rates than private lenders, but most government loans have been to students at four-year colleges. The private lenders have serviced a higher percentage of students at community and two-year colleges, where defaults are more common regardless of lender.
If the feds are now making and owning all such loans, expect default rates to soar. 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.
Sounds like the subprime mortgage mess. I wonder how the government will COLLECT from private business for healthcare payroll taxes due? Will they hire the same folks to make phone calls?
What is the government incentive to make sound decisions about student loans?
The government will nonetheless start spending these illusory "savings" immediately, and this spending is certain to top official estimates. The Obama plan also adds a CBO-estimated $46 billion in new spending over 10 years to enlarge Pell grants. Ominously for the federal fisc, starting in 2011 these grants will automatically rise each year by the consumer price index plus 1%. Not that students will actually benefit from this subsidy explosion. Colleges have reliably raised prices to capture every federal dollar earmaked for education financing.
Does government support of education raise prices? I've seen this argument for quite a few years.
Does government health insurance fuel healthcare inflation? I've seen this argument for quite a few years too.
http://online.wsj.com/article/SB10001424052970203440104574405154157021052.htmlWhen are all these SAVINGS going to be passed on to taxpayers? Pay off the defict/debt? REALLY lower taxes and spending?Are there really savings if the Congress and White House BLOW the money on other things?
Savings by another name still stinks?
