March 24, 2010

Owing Uncle Sam

Justin Katz

It seems like such a small step, and obvious, too:

Students and families who borrow money to help pay for college will see sweeping changes as a result of federal legislation approved by the House on Sunday night.

Although the bill was focused mainly on health care, it contains key provisions involving loans for higher education — including the Stafford Loan for students and the PLUS Loan for parents.

Under the bill, all such federally backed loans will be issued directly by the U.S. government, through the colleges and universities themselves, effective July 1.

See, up to now, a significant number of loans have been handled through private entities, so although the money came from or was backed by the federal government, they took a couple of percentage points of interest to process paperwork (as Neil Downing puts it). All the change — somehow passed along with the healthcare power grab — does is to cut out the middle man. But from a statist's point of view, just about everything and everyone is a "middleman"; all rights and activities ultimately come from the government. When statists' wish to engage in some form of charitable activity (by their definition), the most efficient way will always be through the bureaucracy that controls everything.

I can offer testimony that college loans are like an entry drug to debt. With a bachelor's degree becoming a baseline for jobs that have no practical need for higher education, the loan used to acquire one is like a mortgage for your career, and the government now holds every string. The government approves the loan. The government enforces laws related to debt. And, as President Obama has made clear, owning the debt, the government can opt to forgive it for those who enter preferred occupations, such as "public service."

We were already heading into an era of new indentured servitude over debt. We now know to whom we'll be indentured: Uncle Sam.

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Welcome to the USSA Comrade!

Rejoice. Our Dear Leader Comrade Obama is bringing us a workers paradise.

Free healthcare.

Free housing.

Free college.

Free food.

Freedom from freedom -- we no longer have to be responsible for ourselves or think for ourselves, merely labor for the honor and glory of our Dear Leader in order to demonstrate our gratitude for his wisdom, leadership and beneficence!

Oh truly he is the Obamessiah!

Posted by: Ragin' Rhode Islander at March 24, 2010 8:54 AM

Don't forget free citizenship. So many of these people are only talking about half the story. I keep hearing, "Don't you think everyone should have health care?" I say yes I do. "Well, if Europe can do it, why can't we?". I then ask, if Europe can enforce their immigration laws, why can't we? Try overstaying your welcome in some of these great health care countries, like France, Italy or England. Try showing up on their doorstep and say, I'm moving to your country here, I heard you have great health care. Know if anyone is looking for help? I need a job. Citizen? Oh I'm an American and I'll be sending half my money back to my family in the states. Become a citizen of your country? Don't be silly, I'm an American, I'm just here to work and use your health care system. Your job looks like fun, where do I get an application?

I would have voted for this health care bill (if I were a Congressman) if it included real toughening of immigration law. Heck, simply put ICE agents in the ER like others suggested. Illegal immigrants can still get their emergency health care and then get shipped out. But we'll see a dramatic drop of people using the ER for a twisted knee or a boo boo.

Posted by: Patrick at March 24, 2010 9:11 AM

Patrick, both Dems and reasonable Repubs have been trying hard to reform immigration. However, the far right will not allow them to do so!

Heck, McCain and Bush were on board with Kennedy on the matter!

Again, just because some of the far right have decided to be the party of NO (and, believe me, big business benefits greatly from the status quo - cheap labor), is no reason to stop our country from progression.

Obama has plans for immigration reform - but the chances of it happening are small because a large part of one party cares about getting elected and power - PERIOD. But it seems unfair for you to hold that against a sick person ready to file for bankruptcy and lose their house and savings...doesn't it?

Posted by: Stuart at March 24, 2010 10:11 AM

Railing against Stafford Loans? Keep up the good work. That's sure to win lots of converts to your curious brand of yoyo (you're on your own) capitalism. I didn't realize how lucky I would have been not to have my degree!

Posted by: Russ at March 24, 2010 11:15 AM

And McCain was wrong and he quickly realized it. Kennedy's bill included amnesty. The last amnesty law said it would be the last one. So I'd like to honor that. No more amnesty, otherwise we're just keeping the precedent.

Would I have held up a sick person getting coverage? No, the health care bill doesn't go into effect for another four years anyway, so anyone who is sick isn't going to benefit. Me demanding immigration reform wouldn't affect that. It's all a negotiation.

By the way, has anyone heard Congressional leadership talking about jobs and job creation yet? Other than 17,000 new IRS agents? When are we going to get around to that?

Posted by: Patrick at March 24, 2010 11:41 AM

Who has the authority to say that our present system of higher education, with its cheapened liberal arts majors and phony "...studies" programs designed to spread political indoctrination rather than real learning or intellectual development, with its high prices sustained by government subsidies, is the best system?

The biggest complaint parents and self-reliant students have is the very high cost of college and price rises that far exceed general inflation or personal income growth. But the media ignore the fact that this rising price floor is directly due to the extra money that the government channels into supporting those prices. With their ill-gotten cash flow, colleges have been competing with each other to offer non-educational amenities of many types, such as luxury dorms or "free" notebook computers.

In the same way that government subsidies of the sugar industry keep prices in the US at a multiple of the world sugar price, government subsidies of higher education prop up uneconomic tuition prices. Left on its own, the higher education industry would find the best balance between price and product offered to its customers. I believe that this would dramatically lower the cost of college to a level that people can afford on their own. It's the way the world works, in the real world.

The propaganda tells us that government subsidies support students. What they really do is fund the political indoctrination activities of the Leftists and Statists who dominate academic faculties and administrations.

This is merely another example of the unintended consequences far outstripping the original good intentions (generously allowing that the original intentions may have been good and not cynical "redistribution").

Posted by: BobN at March 24, 2010 12:06 PM

I agree with you Bob. I think the next great Congressional hearings controversy will be about the cost of a college education. There are state universities that are charging upwards of $40,000 a year to out of state students. The colleges and universities are worse than airlines and car dealerships with regard to pricing and "let's make a deal!"

Posted by: Patrick at March 24, 2010 1:02 PM

"That which you subsidize, you increase;
that which you tax, you diminish"
Allegedly T. Jefferson

College tuitions have been rising at 3 - 4 times the rate of inflation. To make more loans avaiable diminishes the need of the colleges to get a handle on costs, in fact it subsidizes the increases. "Eventually, you run out of other people's money" M. Thacher.

I see too many tradesmen making 75-100K a year to still readily accept that a college education will "pay for itself".

Posted by: Warrington Faust at March 24, 2010 3:42 PM


" Heck, simply put ICE agents in the ER like others suggested."

Why not just put them in barrooms which televize "World Cup Soccor".

Posted by: Warrington Faust at March 24, 2010 3:44 PM

Warrington,Stuart,Russ:keep making rancid jokes about ICE agents;borders;"reform",etc.
I wish you could all have walked in my shoes for awhile just to appreciate the depth of the immigration dilemma.
I'll just say this:Name me a country,even the worst Third World sh*thole,that doesn't have immigration laws and border controls.And if you think ICE abuses people.Try getting locked up for an immigration violation in Mexico,or Cameroon,or any other country.A lot less humane than here,I can assure you.
Immigration enforcement is just good common sense.Like traffic laws.

Posted by: joe bernstein at March 24, 2010 5:08 PM


It seems to me you have a background
with ICE,or its predecessor INS. While no one holds you responsible, it has to be faced that it has become a national joke. There seems to be no enforcement, or that enforcement is very selective. When I lived in Boston, about 15 years ago, it was hard to walk past a small construction site at night and not hear the lilt of Irish laughter. That was because they were illegal and couldn't work in the daytime. Now, my local Home Depot is "labor central" for illegals. Drive by at 6-7 am, then tell me about immmigration laws. In some states they are forcing HD to put in latrine facilities for them. What happened? Why was there enforcement against the Irish laborers 15 years ago, and now law enforcement favors illegal Hispanics? 15-20 years ago you "needed to know a guy" to get a gang of illegal Irish laborers, now all you have to do is drive by Home Depot.

"I can assure you. Immigration enforcement is just good common sense.Like traffic laws."

If illegals need not pay attention to our immigration laws, why should I pay attention to traffic laws? Similarly, if a cop stops you for a traffic violation and you don't speak English, why can't he question your immigration status?

When my ex-wife was naturalized, she was asked all sorts of questions about whether she had ever been a prostitute, whether she had ever "starred" in skin flicks, etc, etc. It is not nice to have your wife in tears while doing the right thing to become a citizen. The examiner was a nephew of a Conn. Senator, and had made a name for himself by leaving "stag" magazines about the office.(I found this out by later investigation) Maybe the change is for the better.

Posted by: Warrington Faust at March 24, 2010 10:04 PM

I wasn't an examiner.I was a Border Patrolman and Special Agent.I spent the last nine years of my career in narcotics investigations and previously worked mainly in alien criminal apprehension and smuggling("human trafficking").I also did the routine roundups,which was like shovelling sh*t against the tide.
I have to wonder which examiner passed Grace Diaz on the English speaking portion of the naturalization interview,because she's frequently unintelligible.
Of course,so is Charlene Lima and I'm pretty sure she was born here.
Open borders is insanity.

Posted by: joe bernstein at March 25, 2010 3:02 AM

This WSJ editorial reveals the craven corruption behind the Democrats' government takeover of the student loan business.

President Obama and Congressional Democrats have been criticized for being antibusiness. But Washington is about to bestow a huge gift upon one particular type of business—the type that doesn’t pay taxes.

Despite bipartisan opposition, this week the Democrats hope to use budget reconciliation in the Senate to ram through changes to the health-care bill the House passed on Sunday. Coming along for the legislative ride is a federal takeover of the student-loan market.

On the heels of recent changes in the law that discourage private loans to students, the new reconciliation bill includes a ban on private companies originating federally guaranteed loans. All such loans will now come directly from the U.S. Department of Education.

This plan is hitched to ObamaCare for several reasons. For one, the student-loan takeover could never attract a filibuster-proof 60 votes if it had to pass as a stand-alone measure, and it might not even get 51. The government’s bogus accounting for student loans also creates the illusion that this bill will help save enough money in the first five years to protect the ObamaCare provisions from Republican challenges under budget rules. Remember, budget reconciliation is supposed to be about preventing deficits, so it takes a mother lode of accounting gimmicks to claim that the bill’s spending binge is a cost-saver.

Part of this reconciliation fairy tale is that cutting out the private-lender middlemen will save billions every year as students borrow directly from the feds. But while Democrats are eliminating a revenue stream at for-profit companies, they are simultaneously creating another one for a handful of favored nonprofit companies.

Currently, for loans that the government makes directly to students, the Department of Education conducts competitive bidding and hires private companies to service the loans. But in the pending bill, several dozen nonprofit firms will be eligible to receive no-bid servicing contracts on up to 100,000 student accounts for each firm.

Which nonprofit organizations will qualify? California’s ALL Student Loan looks to be a big winner, thanks to language written by Representative George Miller of California. ALL Student Loan may have helped its cause by retaining the services of Vincent Reusing, a lobbyist whom the Chronicle of Higher Education has described as a “personal friend” of Mr. Miller.

“The person that any lender chooses to be their lobbyist is irrelevant to Chairman Miller,” says Rachel Racusen, a spokesman for Mr. Miller. She adds, “Under this legislation, nonprofit lenders will be required to meet the same high-quality servicing standards as for-profit lenders, including measures of borrower satisfaction.”

To be fair to Mr. Miller, his track record suggests that he favors assaults on profit-making businesses whether or not his friends are lobbying him. It’s also true that Mr. Reusing has been very friendly to more than one left-leaning politician over the years. According to, Mr. Reusing has contributed more than $80,000 to various Democratic campaigns, including Mr. Miller’s.

The nonprofit companies set to benefit from this reconciliation earmark clearly enjoy broad support in the Democratic caucus. And you thought Democrats didn’t like business.

Remember all the Leftist complaints about "no-bid contracts" for Halliburton in Iraq (which were also lies, as the original master contract was awarded in a competitive bid process)?

Posted by: BobN at March 25, 2010 9:54 AM
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