Debt: Having spent years chastising bankers for making risky loans, President Obama is now responsible for a $22 billion shortfall in the student loan program. Guess it's not risky to gamble with other people's money.
Politico has uncovered what it rightly calls a bombshell hidden in the fiscal 2016 budget that Obama proposed on Monday: The federal student loan program "had a $21.8 billion shortfall last year, apparently the largest ever recorded for any government credit program."
That, Politico's Michael Grunwald notes, is bigger than the entire budget for NASA, the Interior Department and the EPA.
Obama can't blame President Bush for this one, since it's a direct result of his determination to have the government take over the student loan business.
Early in his first term, Obama complained that "we have a student loan system where we're giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans." So he set out to eliminate a 40-year-old program that provided guarantees to lenders so they could make high-risk tuition loans at relatively low rates. And he succeeded in 2010.
As a result, the federal Direct Loan Program, created under President Clinton as a "public option" to private lenders, is now the only game in town. Not surprisingly, between 2009 and 2011, the number of these government student loans shot up 62%.
Today, the Education Department has an eye-popping $740 billion in outstanding loans, making it the government's second biggest lender after the Federal Housing Administration.Read the rest of the story HERE.
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1 comment:
I don't particularly think that Obama is all that wrong in what he's doing. We all know for a fact that plans that involve finance will take years to manifest their results. Let's just hope that things start turning up for him soon!
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