What is at Stake: Part II

Buy One Get One Free, or in the case of the government: Take One Take Over Another Free

The title sounds good doesn’t it? I mean, who doesn’t like by one get one free, until you realize you’re paying full price only to get the second one free and that really it’s only half a deal. Well, kind of sounds like the new health care plan, but in this case it’s the federal government that gets the deal not us. I hope you read Part I of the health care situation I addressed; this is a follow up but with a different element. Let’s see how I do here.

I think that something almost as egregious as the health care reform is the student loan program they slipped into the massive 2,700 page reform bill. I have to tell you, only FOXNEWS mentioned it. I saw nothing of it in other media outlets, and I try to watch several other news sources like NBC, CBS, CNN, ABC, and BLOOMBERG. I am absolutely appalled by this underhandedness that has taken place.

I have a daughter about to graduate from college. This past year has been the worst year for getting money for college. I was approved, as a private borrower for an additional 5K, but the school said they were returning that amount because my daughter supposedly got enough in money to cover her senior year. I went round and round with the school but their position was rather resolute, and my daughter’s senior year has been one of penny pinching and bleeding us of our personal savings. It’s too long to discuss, but let’s just say they (school) claimed there were new federal guidelines; that loan money had to go directly to the school and not to the borrower so often practiced in the past. Now I don’t have a problem with that, other than the fact that the school takes about 10-14 days to cut a check to the student. The real problem is that they were dictating to me what I could have for my daughter’s education, and trust me, this is just the beginning. I hope you all are aware of how this is going to work.

The idea behind this loan takeover is simple, the federal government has control over the student loans, and they make the money rather than private industry banks who are the bad guys. Now, the govt. would offer reasonable rates, and an attractive repayment system, but the borrower will be strictly limited to what they can borrow based on school estimates. So, if you need that laptop for your kid, or you want to dress up their dorm room, etc you better come up with the cash because you most likely will be given a number that is estimated on tuition, room and board, and that’s about it. Also, there are some trigger gimmicks in there like, the student loan payments will be capped at 10% of a person’s income, and if they pay diligently for 20 years the remaining amount will be forgiven..

You can skip the part in the brackets and continue below if you’d like. This is just a longer answer to the loan borrowing question.

[Okay, so let’s say you borrow a total of 80,000 during your years in school, your payment would be $573.14 a year at 6%. It is estimated that you will need an annual salary of at least $68,776.80 to be able to afford to repay this loan in full at around 138K. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 1.2. So, what if you don’t get that 68K job? Don’t fret here comes the federal government to the rescue. They would cap your loan amount at 10% of gross, so let’s say you only make 35K, that’s 3,500 a year. And let’s say your income goes up 2.2% each year, at the end of those 20 years you would be earning roughly 54K. With the government plan you would pay back about 105K based on the 10% rule, and on its face that looks good. That is if you pay in good faith; however, and here is the sticking point, if you at any time defer, request hardship, or otherwise postpone any payments the federal deal is null and void.]

Also, by taking over the lending they have in essence taken away the private sector. I didn’t know it was against the law or unethical for banks to make money. And what about all this oversight President Obama preaches? Okay, so maybe private sector businesses need some watching over, instead their idea is just to say, “Let’s just take over the whole thing.” Very much like so many of the mortgage situations; think of who owns most of the mortgages in America now? Don’t you all get it? This is the beginning, and you can argue otherwise, and that is okay. You can talk of equality, fairness, re-distribution, etc. but someday all this is going to come due, so what is the federal government doing? They are taking over several industries that can become what they so criticized the banks for, “creating cash cows.” Pretty soon all cars will be financed through the federal government. If they can’t tax us, then they’ll just take over large segments of interest earning businesses and do it that way.

Again, this insertion into a health care bill, which by the way, I didn’t know student loans had anything to do with health care, but when you crunch the numbers you can see how they squeezed this in there to compensate for the horrendous numbers that universal health care will cost. This isn’t just an off the top observation, it’s a common sense transparent view of what we face in the coming years.

And another thing, why is so much of this being deferred until 2014? Also, didn’t you notice the President’s clever rhetoric about drilling? We’re going to do studies over the next several years. Why? We know now, why not now? Why wait four or five years? Do you think it has anything to do with trying to get so-called bi-partisan support for the Cap and Tax the administration wants to pass? But I am going to have to save that for another day. Back to the original question, me thinks something is rotten in the state of Denmark. I am trying to piece together all this deferred status and implementation stuff, and I believe it is all about trying to sock away enough money to pay for it initially, look good doing it, and then you can slowly trickle in other taxes such as the VAT. Don’t know what that is? Look at Europe. If you have ever been there, do you wonder why a soda costs three dollars, or that your breakfast costs eleven or twelve dollars? Keep an eye out for this one, it’s the hidden tax. It’s the one you don’t see because it is added into the value of the product, and that value added goes to the government. So, what’s wrong with that Scott, if it helps us pay for our social programs? Ever wonder why most poor people shop at Wal-Mart? This is a regressive tax no matter how you look at it.

Well, it has officially begun and we are to blame. You get what you get when you vote for who you vote for. Fifty four percent of the voters voted for Mr. Obama and his gang, so we deserve it. Of course if we don’t like the direction we can change things, or can we? Is there any guarantee that Mickey Mouse won’t show up and vote in November, or Donald Duck for that matter? I am being facetious, but the point is, when a country becomes this divided there is a more likelihood of voter fraud going on because each side worries about victory. What has happened to us? I asked the original question, what is at stake? Well, I ask, what is at stake for us? Can we do anything about it when growing numbers seem to support a move toward a democratic-socialist government? Can we alter a growing apathy that exists within the youth of this culture? A culture of people who have been given basically everything they want but have had to do little to achieve or work for it? Is that not a ripe culture for handouts that on their face look good? But my final question is this, at what price? At what price America?