Obama's Education Reform Act Might Cost Us More Than We Thought

student loanAlright everyone, I have a confession to make. I am a Conservative. Especially when it comes to how our government spends money. I don’t think there should be government incentives to buy new cars or new houses. I don’t think there should be millions of government handouts. It makes me ill to see how high our national debt is. (It’s almost $13,000,000,000,000.00 right now, and rising every day.) And, I hate to say this, because I know how many people are excited about the new government regulation of student loans, but I can see it easily driving up our national debt even more.

The new Education Reform Act places the government in charge of regulating student loans. As part of the Student Aid and Fiscal Responsibility Act, the federal government will lend directly to students, according to Al-Jazeerah.com. This is really good for students who take out loans in order to attend college because it will put a cap on the amount of loans they must repay each year and will lessen the financial strain of earning a higher education. It also provides funding for minority and community colleges that desperately need it. Those are definitely good things.

The bad news, in my opinion, is that this money will be lent from the U.S. Treasury. The U.S. Treasury will lend this money to the Department of Education at 2.8 percent interest, and the Department of Education will lend it to students at 6.8 percent interest. In a perfect world, the Department of Education will earn 4 percent interest off of every student loan. Unfortunately, we do not live in a perfect world.

Many students default on their student loans. So many, in fact, that the Department of Education has released a guide on avoiding default on loans and tips for repaying defaulted loans.

Hopefully the majority of students will repay their government-funded student loans. However, I predict that this reform may end up costing the government more money that it bargains for in unpaid debt.

7 Responses to “Obama’s Education Reform Act Might Cost Us More Than We Thought”

  1. Kelsey says:

    Oh dang, I feel lame. I misread that source. It’s 300,000,000 Americans. There were 1,412,838 bankruptcies filed last year. I apologize for the mistake and hope you won’t hold it against me. 🙂

  2. Kelsey says:

    Not Buying It: Here’s my source for that statistic. I should have included it in the article: http://www.thebankruptcylawyer.net/How%20Many%20People%20File%20for%20Bankruptcy.htm

    Some Guy and Scott: I think reducing our defense budget would be a good idea, as soon as we get out of our current wars. Until then, this is kind of a mute topic. :-/

  3. Frankbeantown says:

    Scott completely agree! Conservatives are so quick to cry socialism and are all worried about bankrupting the country… the Iraq war to date has cost us (get ready) $715,970,106,892 and counting! costofwar.com that is over $6k per person to kill people… thanks for lying to us Bush! could of paid for health care and education for everyone 10X over. If we only had a higher level of education around the world we would 1 have less republicans (proven fact) and 2 less war (not so proven but pretty certain 🙂

  4. not buying it says:

    AHAHAHAHA 300,000,000 people…..riiigggghhhhtttt

  5. Some Guy says:

    Bravo Scott! I cant believe this doesnt come up more! The defense budget has gotten insane.

    As to where conservatives go when you bring up defense spending: they go to national security/everyone is a terrorist and out to get me land. Tis a scary place.

    In all seriousness that statistic is unreal.

  6. Some Guy says:

    Bravo Scott! I can’t believe this doesn’t come up more. As to where conservatives go when defense spending is brought up: they go to national security/everyone’s a terrorist land. TIs a scary place.

    But in all seriousness that statistic is unreal.

  7. Scott says:

    I know this isn’t fully on topic but I feel it to be pertinent.17% of the defense budget could pay for the tuition of every college student in America. I just don’t know where all the fiscal conservatives go when defense spending comes up.

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