Will Obama Forgive Student Loans by Executive Order?


In President Obama's State of the Union address, he mentioned plans to make higher education available for everyone.

Obama said, "We're offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt."

Obama didn't provide details on how he plans to do this, but he has talked about student loan forgiveness in the past.

Students not awarded with full scholarships turn to student loans. And now, those borrowers are defaulting at an alarming rate.

National student-loan debt surpassed the $1 trillion mark, rising by $33 billion in the third quarter of 2013, according to a November report released by the Federal Reserve Bank of New York.

According to Seth Mason (referencing an Institute for Higher Learning report), Nearly half (41%) of student loan holders have been behind on their payments over the last 5 years, and, last year, a full 12% of borrowers were in outright default on their student loans. At the current rate of growth, the student loan default rate will eclipse the historic maximum default rate for home loans, 14%, by mid-2015.

Despite our seemingly non-stop economic "recovery" efforts, the student loan default rate has grown steadily since the 2009 economic bottom, surpassing even credit card debt.

0114_StudentLoans

Despite the default rate, the government is making huge profits* off of cash-strapped students.

According to the Detroit Free Press:

The $41.3-billion profit for the 2013 fiscal year is down $3.6 billion from the previous year but still enough to pay for one year of tuition at the University of Michigan for 2,955,426 Michigan residents.

It's a higher profit level than all but two companies in the world: Exxon Mobil cleared $44.9 billion in 2012, and Apple cleared $41.7 billion.

In 2010, Danny Schechter described student loans as a ticking time bomb of American debt. In 2014, the debt continues to grow.

"The danger here is that instead of capitalism we end up with serfdom, because these students are indebted for life," he said.

Economist Max Wolff said, "Students graduating are facing the worst job market in a generation at least. And so you have people with more debt than we have ever seen before, who are having a harder time finding any job, let alone a job that pays them enough to somehow pay off all this debt."

Despite some reforms like the income-based repayment (IBR) plan, which allows student borrowers to cap their monthly payments to 15% of their discretionary income, students still want relief (Beginning 7/1/2014 this will drop to 10% and all their debt forgiven after 20 years).

Last year, Sen. Elizabeth Warren (D-Mass.) said, "college graduates struggling to repay their student loans should have an easier time getting their debt eliminated if they go into bankruptcy" (Right now the law prohibits student loan bankruptcies). She also wanted to make student loan interest rates the same as the Federal Reserve discount rate, 0.75 percent. Her proposal failed.

Bypassing Congress and using executive orders to get things done was a reoccurring mantra in Obama's State of the Union address. Will Obama issue an executive order to forgive student loans completely, or will his plan look similar to Warren's proposal? Currently, the rhetoric from Obama's opposition are merely scare tactics. Big barks from GOP leaders with no bite. So it should be interesting to see what solutions Obama offers to "solve" the student loan fiasco.

President Obama wants college to be for everybody, but realistically, should this be the case? Is it better to graduate with an art history degree and $30k in debt or to skip college? With that much debt and limited job prospects, the parents' basement is really the only housing this person could afford. Students are discovering that a college degree is not the golden ticket to prosperity as promised by Big Education. A college degree may help, but the key to success in America is still hard work, determination and relentless persistence that will win in the end.

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  • helensatmary

    If his mother and father were alive he would sell then for one lousey vote. What a despicable, horrible, lying, fraud!

  • CJDAUB

    You do not want any forgiveness of loans. It is never "forgiveness" anyway. The "forgiveness" will than become INCOME on the behalf of those given "forgiveness" and their level of income will rise with the amount of school loan that is "forgiven". If someone is forgiven $68,000.00 they will have to pay taxes on $68,000.00 as if they earned it throughout the year. The problem with that is they did not have taxes taken out of the money as they would have if they had earned it working. It is a scheme, and while it is a good idea on paper it sets up the problem for kids or whom ever received the "forgiveness" to now be in a tax lien situation.
    No it is not a good idea in reality. Just work and payback the loan. However long it takes.

  • kbcab

    If he does , I predict that it will only qualify for illegals , free-loaders and muslims...

  • Tampa Bri

    NOT EVERYONE NEEDS A COLLEGE DEGREE! Plenty of people do well - some VERY WELL - with a High School / G.E.D. (or even less!) education.

    Obama has a LAW DEGREE from HARVARD (so it is rumored), and look at what a lying IDIOT he is!

  • Ken Bowman

    The Muslim communist Spy Obama has stepped in it losing this voting block. Obamacare has wakened up young people to the REAL OBAMA!

  • John Patriot

    We better impeach obastard before his term is up; Can you imagine the prezidential pardons he will give? And to who?

  • http://www.commensenses.blogspot.com/ Keyboard Cowboy

    I would sleep better if Obama paid for my propane bill.

    • CJDAUB

      Hey didn't he promise that the first time around??!

  • Lord_Jim

    That all debts having their origin in the Federal Reserve Banking System were repudiated.

  • mbnick

    Were he to do that it would add considerably to the debt with Congressional approval and would be another reason to Impeach him, which is long overdue.

  • fort9erdon

    Yes, now these "students", who have been "professional students", ..... some as long as 12 to 15 years, living off the sweat of those of us who have actually worked, .......instead, stayed in school, changing their major 6 times in order to establish a need "to remain" in school, running up their student loans, and now, ...................... the usurping prez considers just letting them off the hook, comletely. So, whose money is it? Obama's or the taxpayers. Obama might be a president, but those students signed a contract. A contract that Obama does not have the right to make "null and void"! They took the money, .... in many cases, simply to stay in school, and avoid working for a living, and now the time has come to pay the piper, even if it takes them the rest of their lives to pay back. I am a taxpayer, and why should I have to pay (through my taxes) for these students, many of whom are just lazy, and stayed in school, simply to avoid growing up, facing the world and being responsible. NOT ONLY NO, BUT HELL NO! Mr. Prez., you want to help someone, how about giving a leg up to us seniors, who actually worked for a living for over 50 years, paid for our own educations, and now have to choose between groceries and our medications??? Mr. President, you are PURE EVIL! These so called students have a lifetime to earn and payback, even if they must scrimp a little at first to pay back what they owe? We seniors, are in a dead end place, where we are no longer able to increase our earning power. We are stuck with what we now have, and no chance to increase our incomes. WE, THE SENIORS, need the help FAR MORE than so called students!

  • J J

    Anything for a vote - regardless of the cost!!!

  • Elaine Farrell

    I doubt he will do anything more than declare a minimum payment that is extremely low. Progressives need to hold the debt over our kids heads to keep them enslaved. Remember early on Obama suggested they perform "public service" jobs for a couple years, in exchange for debt forgiveness? He may offer that again as well.

  • Thomas Viveiros

    One deadbeat looking for forgive millions of others .