The Student Loan Crisis

Yesterday the President was out on the campaign trail drumming up support for congress to extend a lower interest rate for current student loans as of July of this year.  The action is required because the Democrat-controlled congress of which Obama was part of, passed the bill lowering the interest rate in 2007 with a sunset clause that was coincidentally smack dab in the middle of a Presidential campaign.

This is now ramping up rumors that if the President is still in trouble nearing the election, he will propose that we "forgive" all outstanding student loans outright, which would end up being the highest price for buying votes in the history of this country.

The problem we then face is that, these loans, along with the principle and interest we expect to receive are on the books and are part of the federal budget.  Forgiving them would put another huge hole in our projected deficit and I'm sure would elicit an unpleasurable response from those who either worked their way through college, or in fact paid off their student loans already.  So how to we cover the cash drain from forgiving this debt?

If the Republicans were smart (and every day it is more obvious that they're not), they would focus on the true cause of the student debt bubble, which is the un-justified rise in the cost of college education.  Most of these top universities that have been wilfully charging these bloated rates have huge endowment funds just "sitting there" (as the left likes to say about rich peoples savings).  My advice would be to ramp up support for a special tax on "big education", targeting those endowment funds (which are made up of donations from wealthy alumni) to pay off those loans that were racked up because their ridiculously high tuition rates in the first place.

Since "big education" is almost entirely in support of democrats, there is little risk of loss of votes or campaign monies in pitting big education against the middle class who would end up getting stuck with the bill if the loans were simply forgiven without some sort of off-setting revenue....