So, I am going to leave open the fact that I am missing something here. That I should, as I normally do, totally disagree with Barack Obama. However, I am having a hard time finding that with this decision.
What decision? Student loans. With the ‘health care’ bill, there was a large section that dealt with student loans. The situation before the current law was very odd to me. A commercial institution would 'loan money to me, but they had NO RISK. If I defaulted, the federal government would back up that loan. Ultimately being held responsible for my debt. This is why student loan debt is ‘for life’. You can’t file bankruptcy on it, you either pay it or they will take it from you. Either by garnishment from your wages, tax return, or ultimately your social security benefits. However if I paid, the profit made off the loan went to the bank.
I’ve never understood this.
So what is the situation now? The federal government is squeezing out the private lenders. They can no longer make loans backed by the federal government. Those loans can only come from the federal government.
I’ve done some searching to figure out why this is bad and I found a few reason brought up:
- The customer service of the government workers is poor.
- From personal experience, is the customer service of the government worker poorer than the private worker? Yes. Is it poorer than Dell’s technical support? No. It is adequate, and the truth is… if you pay your bill, you never have to talk to them.
- Loans in default will skyrocket.
- I am sure it will go up. However, student loans are a debt that you cannot get rid of. So even if they go in default, in the end.. the debt will be collected. So the fix for this? Regulate how hard and how defaulted loans are collected. This is not a showstopper.
If these banks want a piece of this pie, there is NOTHING stopping them from offering student loans that are not backed by the federal government. Nothing.
This is one issue, even after reading a bit, I think I have no issues with the federal government taking over.
Health insurance on the other hand….