Two weeks ago, Congresswoman Maxine Waters, in her role as House Financial Services Committee chair, sought to shame bank executives. Rightly concerned by U.S. student debt levels, she began, “Today, there are more than 44 million Americans that owe $1.56 trillion in student loan debt. Last year, one million student loan borrowers defaulted which is on top of the one million borrowers who defaulted the year before. What are you guys doing to help us with the student loan debt?”
After several bankers stated their banks had exited student loans, JPMorgan Chase CEO James Dimon tried saving Maxine further embarrassment, explaining, “When the government took over student lending in 2010 or so, we stopped doing all student lending.”
While it’s scary realizing that the inept Waters oversees U.S. financial industry laws (elections have consequences), it’s even scarier that she had no idea that the Obama administration nationalized student lending from private lenders. This was in 2010 as the U.S. economy was reeling from its previous Democrat-led calamity in expanding government control using Fannie Mae and Freddie Mac, creating the housing mortgage bubble leading to the 2008 market collapse and recession.
It was also the same time Democrats passed Obamacare without a single Republican vote to control about one-seventh of the U.S. economy. These two examples alone demonstrate Democratic thirst to expand federal control and diktat and follows the same pattern of increased cost, government waste and inefficiency.
Just as medical insurance costs skyrocketed despite Democratic promises, so also has student loan debt. Investor’s Business Daily states that student loan debt exploded 100-fold from $154.9 billion in 2009 to $1.56 trillion in 2019, creating the large financial bubble the U.S. faces today. It comprises 7.5% of U.S. GDP and far surpasses the country’s collective debt for autos and credit cards.
What’s this like on an individual level? Currently, average student loan debt is $37,172, climbing rapidly and essentially creating federally indentured servants. It often takes 10 or more years to pay loans back – if students pay them back. Currently, 27% of individuals are delinquent. College costs are escalating much faster than other costs and eight times faster than wage growth. Taking advantage, Big Academia raises tuition as fast as the feds allow greater loan amounts, transferring the burdens to naïve or unsuspecting students.
Having created a much larger problem but ever the opportunists, Democratic presidential contenders, led by Elizabeth Warren and Bernie Sanders, pander a new solution to the problem: Make college free and forgive existing (and future) student debt.
Fanning class warfare flames, they’re promising to “tax the rich.” Nothing is stopping millionaires like Warren and Sanders from donating their own funds for their idea, but like most socialists, they only seek to redistribute your money. Not everyone needs or wants to go to college. In fact, just one-third of the population obtains a college degree. Perhaps the other two-thirds prefer to use their money for their own pursuit of happiness rather than paying for a politician’s plan to forgive the debts incurred by those choosing to attend college.
Greg Beck is a Leavenworth Times columnist.