President Obama said that the cost of student loans was too high when he took office. Billions and billions of federal dollars was going to banks who would then reap profits by extending loans to students where they had no risk because they were federally insured. But they would still earn a profit on those loans.
Having been in the same shoes as President Obama declared he had been, paying off student loans, I know from experience the interest rate on those loans is very low. Mine was prime plus one percent, maybe one and a half. So one could easily argue the "profit" derived from such loans was a management fee for the overhead of loan supervision.
I could spend all day on that, but that would take us off topic. Something I'm sure he wouldn't mind us doing.
He then bragged to the students that his administration had fought "tooth and nail" to remove those "middlemen" from the equation, lowering the cost of student loans.
That was his solution to lowering the price of a college education.
Let's be serious, assuming the cost of student loans actually did come down, because we all know that the government is far more efficient at managing than the private sector, who benefits from that? The provider of the loan. Not the recipient. The federal government benefits.
What's the most notable concept President Obama shared? The fact that he still wants you to take out loans. He still wants you in debt. He's just making it easier for you to get there and the debtor is now the government instead of a financial institution you prefer to do business with.
Here's a thought. Why not lower the actual price of the education? I know why, and when I say it, you will realize you know why too. But then, even if you have to take out a loan on $40,000.00, that's much less than $60,000.00. Payments are lower, the term could be shorter. All kinds of options are open. If you worked hard and were very frugal, you may not even need a loan (but perhaps that would defeat the President's idea of you still being in debt).
But I'll tell you why the President doesn't address lowering the price of the education itself. Two reasons:
- It's because there are no federal universities. States control education. Education has always been a states issue. Not a federal issue. Except to get political points, it's pointless for presidential candidates to talk about the price of an education.
- Lowering the price of an education would "require" teachers to be willing to work for less. Either less pay, or less benefits, or a smaller retirement package. Teachers unions will not allow that and those unions are substantial donors to the President's reelection bid. So he won't address that directly.