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... at a time when college has never been more important, it’s also never been more expensive.
President Obama has a hit a theme in his most recent weekly addresses: Here's a problem, here's an executive branch solution I'm implementing, but we still need the help of an obstructionist Congress to provide a more comprehensive solution, and please, Americans, contact your representatives to get them moving on this even as I keep working on it.

This morning's weekly address applied this formula to higher education and student loan debt.

The problem:

The average undergraduate student who borrows for college now graduates owing almost $30,000. And I’ve heard from too many young people who are frustrated that they’ve done everything they were supposed to do – and now they’re paying the price.
The actions he's taken as president:
I’ve taken action on my own to offer millions of students the opportunity to cap their monthly student loan payments to 10% of their income.
But there's that damn obstructionist party in Congress:
But Congress needs to do its part. The good news is that Senate Democrats are working on a bill that would help more young people save money. Just like you can refinance your mortgage at a lower interest rate, this bill would let you refinance your student loans. And we’d pay for it by closing loopholes that allow some millionaires to pay a lower tax rate than the middle class.
And the implied action ask, with his own vow to continue to work on the issue:
That’s the choice that your representatives in Congress will make in the coming weeks – protect young people from crushing debt, or protect tax breaks for millionaires. And while Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans – including new action I will take this week.
To read the transcript in full, check below the fold or visit the White House website.

Remarks of President Barack Obama
Weekly Address
The White House
June 7, 2014

Hi, everybody. This is commencement season, a time for graduates and their families to celebrate one of the greatest achievements of a young person’s life. But for many graduates, it also means feeling trapped by a whole lot of student loan debt.  And we’ve got to do more to lift that burden.

See, in a 21st century economy, the surest pathway into the middle class is some form of higher education. The unemployment rate for workers with a bachelor’s degree is just 3.3 percent – about half what it is for high school graduates. The typical graduate of a four-year college earns $15,000 more per year than someone with just a high school degree.  

But at a time when college has never been more important, it’s also never been more expensive.

That’s why, since I took office, I’ve worked to make college more affordable. We reformed a student loan system that gave away billions of taxpayer dollars to big banks and invested that money where it makes a bigger bang – in helping more young people afford a higher education.

But over the past three decades, the average tuition at a public four-year college has more than tripled. The average undergraduate student who borrows for college now graduates owing almost $30,000. And I’ve heard from too many young people who are frustrated that they’ve done everything they were supposed to do – and now they’re paying the price.

I’ve taken action on my own to offer millions of students the opportunity to cap their monthly student loan payments to 10% of their income. But Congress needs to do its part. The good news is that Senate Democrats are working on a bill that would help more young people save money. Just like you can refinance your mortgage at a lower interest rate, this bill would let you refinance your student loans. And we’d pay for it by closing loopholes that allow some millionaires to pay a lower tax rate than the middle class.

That’s the choice that your representatives in Congress will make in the coming weeks – protect young people from crushing debt, or protect tax breaks for millionaires. And while Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans – including new action I will take this week.

This country has always made a commitment to put a good education within the reach of all who are willing to work for it. That’s what made us an economic superpower. That’s what makes us special. And as long as I hold this office, I’ll keep fighting to give more young people the chance to earn their own piece of the American Dream. Thanks, and have a great weekend.

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Comment Preferences

  •  The GOP are being bombarded with things they (9+ / 0-)

    have refused to even address.....but.......it's only June.....maybe they'll do something between now and November......Naaahhhhh!

  •  Lower interest rates (3+ / 0-)
    Recommended by:
    Powered Grace, cocinero, stewarjt

    on loans? That's the big idea?

    •  Wealth Extraction Under a Different Guise (5+ / 0-)

      Yes, that's basically the big idea, to stretch out your repayment schedule to 60 years from 30.  An even better idea would be to make the debt inheritable by your children, so that they will be responsible for paying off the ridiculous amount you couldn't.  

      Between credit card debt, student loan debt, and the mortgage scams the bankers have pulled off the biggest theft in human history and they've salted the loot away in the Caymans.  There was an article in the LA Times a couple years ago that estimated they've stolen $32 trillion dollars.  How nice would it have been to have all that money re-invested in America doing stuff like building true broadband infrastructure, a smart grid, alternative energy, feeding the hungry, etc?

      Education, like health and roads, are a public good.  If we want a competitive workforce and strong country, our people must be educated without impoverishing them in the process.  We need fully publicly funded secondary education.  If you have the smarts and work ethic to achieve, the country ought to help you, not punish you.

    •  It's the college costs version of ACA. (1+ / 0-)
      Recommended by:
      Sparhawk

      Health care too high?
      Well -- we'll force you to buy insurance but, if you are below a certain income level, we'll take the sting out of it with subsidies.

      College cost too much?
      Hey -- we'll cut your interest rates and let you pay for-freakin'-ever on your loans.  Young people these days don't cars and houses, anyway. No big deal. Right?

      Still, for all of the possible snark, lower interest rates are something that is better than nothing.

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Sat Jun 07, 2014 at 07:30:49 AM PDT

      [ Parent ]

      •  Re (3+ / 0-)
        Recommended by:
        Justanothernyer, chuck utzman, jyssco
        Still, for all of the possible snark, lower interest rates are something that is better than nothing.
        Not necessarily. Colleges may just increase base tuition to "compensate".

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sat Jun 07, 2014 at 07:46:56 AM PDT

        [ Parent ]

        •  Colleges don't loan to students in general. (2+ / 0-)
          Recommended by:
          dinotrac, HM2Viking

          Sallie Mae and others get the interest payments.  SLM is about 20% of the market.

          http://en.wikipedia.org/...

          I haven't read up on this bill so I don't know how a SLM is effected.  

          "The way to see by faith is to shut the eye of reason." - Thomas Paine

          by shrike on Sat Jun 07, 2014 at 07:52:02 AM PDT

          [ Parent ]

          •  That's not what I mean (1+ / 0-)
            Recommended by:
            Justanothernyer

            Affordability or perceived affordability is what keeps college tuition in check.

            When students take out student loans, they get a piece of paper that says "your post-college payment for this loan will be $X/month". The perceived affordability of X is what keeps base college tuition (somewhat) under control.

            Lower interest options lower X, perhaps a lot. But colleges already know from previous experience that students are willing to sign a piece of paper for $X a month, so rational behavior for them is to increase their tuition until the payment is again $X.

            So students are now in an even worse situation because costs that used to be interest payments are now principal balance. Good for overpaid college administrators, very bad for students.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sat Jun 07, 2014 at 08:32:06 AM PDT

            [ Parent ]

            •  There is that potential. Sad state of affairs if (0+ / 0-)

              supposedly non-capitalist colleges are charging what the market will bear.

              LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

              by dinotrac on Sat Jun 07, 2014 at 04:32:58 PM PDT

              [ Parent ]

              •  Well remember (1+ / 0-)
                Recommended by:
                dinotrac

                They are "non-profit" but have spectacular facilities and lots of high-paid administrators and star professors. Takes a lot of money to run that kind of operation.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sun Jun 08, 2014 at 06:41:28 AM PDT

                [ Parent ]

        •  If we can loan (0+ / 0-)

          Bankers money at 0% we can lower student loan interest rates to the core rate of inflation. 2% money is repayable....6.8% money isn't repayable when wages are held flat.

          •  Sure it is (3+ / 0-)
            Recommended by:
            Justanothernyer, AlexDrew, dinotrac

            You'd rather have a low principal loan at 6% than a high principal loan at 2%.

            The result of this action will simply be that colleges raise tuition to take advantage of the new loan affordability and students will be even worse now than before.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sat Jun 07, 2014 at 08:34:35 AM PDT

            [ Parent ]

            •  Agree completely. Lower principal gives you an (0+ / 0-)

              opportunity to relieve yourself of the burden by squeezing the belt, having a good year, etc.

              LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

              by dinotrac on Sat Jun 07, 2014 at 04:34:08 PM PDT

              [ Parent ]

            •  are you making a moral hazard argument? (0+ / 0-)

              Public university tuition rates are set by state boards.

              I am not sure you can really make a straight line argument that refinancing the existing student loan debt down to 2% will stimulate tuition increases.....

              These proposals are targeting existing debt....A 1.3 trillion debt burden is a tremendous drag on the economy....

              The future debt problem can be managed by disqualifying the private diploma mills for poor graduation rates and poor employee placement rates.

        •  your logical fallacy (0+ / 0-)

          is that student loan interest rates affect college revenues. there is no effect.

          The colleges collect the tuition out of the aid packages. The balance is netted to the students.

          Please demonstrate how colleges lose revenue by lowered federal loan interest rates.

          •  They don't "lose" revenue (0+ / 0-)

            But it is obvious that with lowered interest rates there is more revenue available for the taking. Economically rational institutions will take it.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Sun Jun 08, 2014 at 06:44:13 AM PDT

            [ Parent ]

            •  I just don't see it..... (0+ / 0-)

              If the market truly worked student loan interest rates would have already fallen to <3.5%.  Easing interest rates for borrowers is a pretty direct economic stimulus.

              I would be happy to read real evidence.

    •  of course (2+ / 0-)
      Recommended by:
      Justanothernyer, Sparhawk

      The real problem is, obviously, the actual cost of college education and the necessity of debt, not the interest rate.  College tuition in the US is many times more than comparable tuition would be in any other rich country that even has college tuition, depending on which country and which US college you attend.  

      And in the US, colleges mindlessly try to "compete" against each other by building fancy dorms and gyms and useless buildings.  It has nothing to do with "market" competition; no-one voluntarily offers a lower price and they all force consumption of the same fancy crap that students don't need or ask for, driving up costs.  They throw begged and borrowed money around by the millions for useless crap, pay administrators millions, and claim it's justified to prevent students from attending other colleges, even though other colleges do exactly the same thing.

      The college system has largely become a vast monopoly shakedown.  You can't get a job without a degree, so we all agree to make that degree just as expensive as possible, without quite pushing it to the point that makes it economically irrational.  (In other words, college gives an income advantage, so they try to get much, but not all, of that income advantage from students in the form of upfront cost of acquiring it.)  College is like a New York City liquor license or cab medallion.  It will make you money but the guy who sells it charges so much that a lot of that extra money goes to the cost of getting it.  But he still sells it just cheaply enough to make it worthwhile.

      (Americans have collaborated in this by creating a social stigma against "public" colleges.  Get the same education less expensively and you may be discriminated against.)

      But right now, there are two viable political parties.  One has graduated from harsh right wing policies to realty denying insane opposition to anything not maximally evil.  Their policies imply a belief that college is not expensive enough, and too accessible.

      The other has a few progressive members but mainly offers solutions like this, for now, although it could possibly be influenced.

      Take your pick.

  •  The GOP have clearly taken sides (1+ / 0-)
    Recommended by:
    skillet

    They side with the very wealthiest at the expense of everybody else.  It couldn't be plainer.  But they try to camouflage their stubborn inaction on anything that might help the public, they make a lot of noise about trumped up scandals and lady parts and the dread Obamacare.  Will their voters ever wise up?

    "It ain't right, Atticus," said Jem. "No, son, it ain't right." --Harper Lee, To Kill a Mockingbird

    by SottoVoce on Sat Jun 07, 2014 at 07:17:26 AM PDT

  •  I like the strategy here. Help young people out (1+ / 0-)
    Recommended by:
    Words In Action

    and hopefully they will show up and vote in a mid-term election.

    It is just amazing to me the amount of people that take a pass on mid term elections.

    UID 35,098 Nov. 12, 2004. Seems like yesterday.

    by flatford39 on Sat Jun 07, 2014 at 07:22:38 AM PDT

    •  It's a good strategy, but Democrats need to put a (1+ / 0-)
      Recommended by:
      AlexDrew

      bill on the table to look at. That way they can say , "See? THIS is what we are trying to do for you and THIS is what they will stop cold."

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Sat Jun 07, 2014 at 07:32:32 AM PDT

      [ Parent ]

    •  38% turnout means that (0+ / 0-)

      right or wrong over 60% of the populace no longer trusts either party or federal government.

      You want to dramatically change that for D's? Create a slate of audacious legislative promises and guarantee that they'll be passed if they get majorities in both chambers.

      I've never left a blank space on a ballot... but I will not vote for someone [who vows] to spy on me. I will not do it. - dclawyer06

      Trust, but verify. - Reagan
      Vote, but Occupy. - commonmass

      by Words In Action on Sat Jun 07, 2014 at 10:17:21 AM PDT

      [ Parent ]

  •  Arne Duncan's slush fund enriched by student debt (3+ / 0-)

    Obama needs to look at his own Dept of Education & Duncan for profiting off defaulted student debt.

    Matt Taibbi exposed the corruption at DoEd last year:

    "While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young.

    Department of Education was projecting it would actually make money on students who defaulted on loans, and would collect on average 100 percent of the principal, plus an additional 20 percent in fees and payments.

    Read more: http://www.rollingstone.com/...
    Follow us: @rollingstone on Twitter | RollingStone on Facebook
    •  There is an 18% fee for defaulting on student (2+ / 0-)
      Recommended by:
      maryabein, Words In Action

      loans, AND  student loans ordinarily cannot be discharged through bankruptcy.  Racket indeed.

      Take that 30,000 loan at 18 percent and you've got 5400 non-dischargable dollars right there.

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Sat Jun 07, 2014 at 07:39:41 AM PDT

      [ Parent ]

  •  Have Democrats put forward their bill yet? (0+ / 0-)

    Don't want to be caught with your pants down in the upcoming elections like you were in 2010 on middle class tax increases.

    I doubt that many voters trust what politicians say or say they are working on.  A bill on the table is concrete.  AND -- it makes Republicans vote against it.  It's a win-win regardless of how the House and Senate votes go.

    Things like this wouldn't have the same impact as the aforementioned tax increases because there is no looming increase, but it would be a shame not to get full advantage of what you're doing.

    LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

    by dinotrac on Sat Jun 07, 2014 at 07:28:16 AM PDT

    •  Not quite, but rest assured, Mitch McConnell (2+ / 0-)
      Recommended by:
      shrike, dinotrac

      is already out in front obstructing it: Obama to Endorse Elizabeth Warren's Student Debt Proposal

      “This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy," Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement.

      "Show up. Pay attention. Tell the truth. And don't be attached to the results." -- Angeles Arrien

      by Sybil Liberty on Sat Jun 07, 2014 at 07:43:23 AM PDT

      [ Parent ]

      •  Make him obstruct it -- Introduce the bill! (1+ / 0-)
        Recommended by:
        Sybil Liberty

        So far he's just talking and there's nothing to contradict him with.

        Did you notice how much easier it got to sell ACA once it became real?  Doesn't matter how bad the total package is, if there's enough there to help enough people, it will win points.  A real bill with real provisions can be pointed to, create an opportunity to say "This is what we're trying to do for you. This is what they don't want you to have."

        LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

        by dinotrac on Sat Jun 07, 2014 at 04:31:18 PM PDT

        [ Parent ]

  •  The thing I don't understand about student debt (3+ / 0-)
    Recommended by:
    skillet, Halfton81, stewarjt

    is that it can't be laid off in bankruptcy. No one wants default to be so easy that borrowers default en masse. But for crap's sake, Donald Trump can evade debts via bankruptcy time after time as a business model, but a new graduate can't, not once, not ever?

    If I have this right, can anyone explain how this provision got inserted?

    •  Yeah. Doctors and lawyers would default on (1+ / 0-)
      Recommended by:
      Justanothernyer

      six-figure loans immediately upon graduation during bankruptcy.  A one-time event like that would not really hurt their earnings potential so it became SOP until prohibited.  

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Sat Jun 07, 2014 at 07:46:02 AM PDT

      [ Parent ]

      •  I see your point but not really (1+ / 0-)
        Recommended by:
        Justanothernyer

        Physicians have never had a tendency to default on student loans.

        Putting aside honesty, there is a simple reason.

        To use bankruptcy as a scam, you have to be secretly cash rich.  (I am describing the scam here, not imputing the scam to the vast majority of people who go bankrupt involuntarily because of struggle.)

        After bankruptcy, you have no credit.  If you chose to live in the right state, and you already had a paid off mansion, you may have a mansion.  If you hid cash, you have cash.

        Now, go out into the world and try to rent an apartment, stay at a motel, buy a car, rent a car, join a gym, etc, without credit.  Try paying a dentist bill in cash if you are living from paycheck to paycheck.  Try getting a job after bankruptcy if the jobs you are qualified for include a credit check (disgraceful but permitted).

        All of the things I just described, and many more, are hard without credit - unless you have a lot of cash.  With a lot of cash you can get anything - but it takes a lot of cash.  

        Without a lot of cash, lack of credit reduces you to the level of living in a dangerous and/or severely inconvenient environment.  Cash is all you need at the lowest end and highest end of the economy.

        But for the middle, including the bottom of the lower middle, credit is key.

        New doctors go to low paying residency jobs and then become upper middle class to mildly rich after years of additional training.  They aren't in the "ha ha ha I'll just 'go bankrupt', screw everybody, and use cash for all my luxuries" demographic.

      •  Judges have to sign off on a bankruptcy (1+ / 0-)
        Recommended by:
        AlexDrew

        Or, professional societies could always deny credentials to people who have done this.

        No reason to give student debt any special protection. It'll all come out in the wash, eventually.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Sat Jun 07, 2014 at 09:12:23 AM PDT

        [ Parent ]

  •  Depending upon congress (0+ / 0-)

    To pass the senate's version by closing loopholes (raising taxes) on millionaires or without offsets?

    Pass the smelling salts to Johnny Boehner, please. Of course he should do it and of course he won't unless we have a "marriage equality" moment in the congress where suddenly people wake TF up. Maybe then congress could see its way clear?

    Every human being has paid the earth to grow up. Most people don’t grow up. And you find out what it costs us to love and to lose, to dare and to fail. And maybe even more, to succeed. What it costs, in truth.—Maya Angelou

    by TerryDarc on Sat Jun 07, 2014 at 08:32:32 AM PDT

  •  The Discount Rate (0+ / 0-)

    Is the interest rate the Federal Reserve charges to member banks for borrowing.  It's currently 0.75%.

    If commercial banks may borrow from a government entity at 0.75% to lend the money and profit or just make up for required reserves that they loaned for profit, then why can't college students borrow directly from the government at the same rate to pay for their education.

    Other than that this is more capitalist corporate friendly, half-stepping, Milquetoast, wishy washy, gruel from the supposed Democrat who has been hosing the working class for the last six years.

    If I was a communist, rich men would fear me...And the opposite applies. The history of all hitherto existing society is the history of class struggles.

    by stewarjt on Sat Jun 07, 2014 at 08:55:47 AM PDT

  •  A good reason to crank this up for November by (0+ / 0-)

    making it a Party-wide pledge of the President, all incumbents and candidates that they will sign specific legislation if they obtain majorities in both chambers.

    Add this one to the lifetime ban on lobbying.

    I've never left a blank space on a ballot... but I will not vote for someone [who vows] to spy on me. I will not do it. - dclawyer06

    Trust, but verify. - Reagan
    Vote, but Occupy. - commonmass

    by Words In Action on Sat Jun 07, 2014 at 10:15:07 AM PDT

  •  It's still delusional and absurd to send everyone (0+ / 0-)

    to college.

    The Clinton push was based on a complete logical fallacy:
    1. At present (1995 or so), college graduates earn more than people without college.
    2. Therefore, if everyone went to college, everyone would earn those higher salaries.

    Nonsense, and the past 20 years have amply demonstrated that.

    Add #3: Employers should not have to lift a finger to train workers; that should be a cost imposed on workers themselves and/or the government.

    This is nuts.

    What we have created is a system where high school teaches less and less, and everyone is told that they must go to college or be permanently unemployable. Then they incur huge amounts of debt, to get degrees of varying value, only to discover that the degree does not guarantee them any job at all, much less a well-paying one.

    In the process, colleges have expanded exponentially, far outstripping the demographics (and that built environment has to be paid for somehow, even if it's not needed), and millions of people are in such severe debt that they will never dig out, much less be able to buy a house or start a business or do anything else.

    At least half of my students (college freshmen at a private college) would be far better off not being in school at all. They have no idea why they're there, except that it's necessary for them to get a job. It's difficult to teach them because they have no curiosity or interest in learning, only in finishing and getting the degree (while living "the college experience" to the hilt, free of responsibilities).

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