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ObamaLoans Up by Almost 3 to 1

Written by Gary North on November 6, 2013

We all know about ObamaCare. But not many people know that there was a second section of ObamaCare. I like to call this ObamaLoans.

There are two laws that constitute ObamaCare. The first one is incarnated by the failed www.Healthcare.gov website: the Affordable Health Care for Americans Act. But that was only half of the law. The other half was the Health Care and Education Reconciliation Act. It gets no publicity. It needs lots more.

As a rider to the Health Care and Education Reconciliation Act was the Student Aid and Fiscal Responsibility Act. It decreased fiscal responsibility. As part of this act, there was the Federal Direct Student Loan Program. This ended the old program of guaranteeing student loans made by banks.

The official goal of the Affordable Health Care Act was to make health care affordable. Its effect has been to drive up health insurance costs for millions of voters.

The official goal of the Health Care and Education Reconciliation Act was to make college more affordable. How? By making loans to students. The effect has been to lure millions of students into long-term debt for the purchase of liberal arts degrees that do not lead to high-income jobs.

ObamaLoans took loan-making decisions away from banks and placed this into the hands of federal employees at the Department of Education — bureaucrats with job tenure. The amount of student debt owed to the U.S. government in 2009 was $120 billion. Today, it is $675 billion. (This does not count private loans, which brings the total to about a trillion dollars.)

In July 2010, ObamaCare was passed. That’s when the loans began to multiply. The Direct Student Loan program went into effect that month. At that time, outstanding student loans totaled $179 billion. Since then, this figure has risen to almost three to one.

The federal government now serves as the banker for student loans. Before, the federal government used banks to distribute the money.

In January 2001, federal student loans were at $68 billion. They increased 76% to $120 billion in January 2009.

Students can earn a liberal arts degree from any number of colleges through CLEP exams and distance learning for under $15,000. They can live at home, work part-time at a fast food restaurant, and easily pay for college: under $11 a day. They can graduate without debt. But they don’t. Instead, they load up on debt. Their parents also load up on debt.

ObamaLoans are burdening a generation of Americans with lifetime debt servitude to the federal government.

Affordable college? Sure. Just like affordable health care.

This is why the Ron Paul Curriculum promotes the use of CLEP exams. A student can graduate from high school and enter college as a junior, for an extra $1,800 in exam fees. This is the way to get through the first two years of college — no tuition, no dorm fees, no keg parties — but most parents of public school students have never heard of this.

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7 thoughts on “ObamaLoans Up by Almost 3 to 1

  1. The Direct Student Loan program was a vote buying program – it worked.

    The mountain of debt it has created will eventually be bailed out. The political party that bails out this debt is guaranteed to win the next round of elections, a second vote buying program. It will work.

    But the mountain of debt isn’t quite big enough to capture enough votes yet, so we wait.

  2. You are misleading people who think you can "buy" two years of college using CLEP. I did CLEP out of some college courses and I am here to tell you the exams are not easy. I don't think 1 in 1000 of today's students could pass one of them, much less enough to get two years of college credit.

  3. Greg Nagley says:

    Back in the mid 70’s after returning from Vietnam I took 4 CLEP exams and earned 12 semester hours credit and it cost me $200.00 then.

  4. TheObserver says:

    I took two courses via correspondence while at the U. of I. to finish my B.S. in the mid-70's. It was a cakewalk. Finished them both in about six weeks and I didn't have to subject myself to going to class three times a week to listen to some leftist loser drone on about "this and that". I can't recall how much they cost but is was cheap. These were "puff" courses", not math, engineering, statistics, etc. One was Business management.

  5. Actually what North is talking about is not attending university, but instead studying the books needed to know the material for the CLEP test.

    Then you can get more students passing the CLEP tests. Two years spent studying at home or in libraries.

  6. I took the CLEP and received credit for 23 hours. This enabled me to earn a BA and MA in three years. So yes, it can be done if you spend the necessary time in preparation.

  7. Bill in NC says:

    These new federal student loans will never be paid back in full.

    Instead the borrowers will apply and be approved for 'income-based' repayment, which means they'll pay a small fraction of their income for several years, and then the rest will be forgiven – another vote-buying scheme paid for by your tax dollars.