Cutting and consolidating student loan debt is worthless action if the targeted borrowers don’t have jobs.
From the Wall Street Journal:
Existing rules allow graduates to limit their loan payments to 15% of their income, with all debt forgiven after 25 years of payments. Congress already has passed a change to that program that would allow borrowers in 2014 to pay 10% of their income, with all loans forgiven after 20 years. On Wednesday, Mr. Obama will announce that he is speeding up this program so it will affect students beginning next year instead of in 2014.
This is great for young people who have jobs, but what about the millions of young Americans with no income and no jobs? A small discount on loans does nothing for people who can’t even come close to making their payments.
Offering debt forgiveness to people that have no jobs is like handing a Band-Aid to a cancer patient.
Young Americans are miserable. 85 percent of last year’s graduates had to move back with their parents, and the youth unemployment rate is the highest it’s been since World War II. The Obama administration is losing support among young people, and rightfully so.
The Obama administration has destroyed jobs for young people. Young America’s Foundation has documented the failure of Obama’s government-centered “jobs” policies in our brochure, “10 Reasons the Obama Administration’s Policies are Killing Jobs.”
Two of the most prevalent reasons are overregulation (costing businesses an average of more than $10,000 per employee) and incessant government spending. These policies take capital away from job creators and make them skittish to hire new workers.
The Obama administration is promoting another “jobs” policy proposal, but their plan is just more government spending like the stimulus—a demonstrable job killer. Removing money from the private sector and filtering it through government doesn’t create jobs. It kills them.
During the Reagan administration—which had overwhelming support among young people—youth unemployment dropped more than five percent. Reagan fostered the type of job growth we need today by getting government out of the way and offering tax breaks to job creators.
The Reagan model would empower our young people, not increase their dependence on government hand-outs. From the beginning, government involvement in the student loan industry has put young people at this risk.
College costs and loan expenses have soared ever since the government got involved with the student loan industry in 1972 with the birth of Sallie Mae. Just like its siblings, Fannie Mae and Freddie Mac, this government-sponsored enterprise built a bubble in the loan industry.
Now that the Obama administration has fully nationalized the student loan industry, they have permanently indebted millions of people to the government. This relationship is far from healthy. It indentures young people to Washington—fostering a paternalistic, nanny-state model for governance.
Our government should be enabling self-reliance. Young people need jobs from the private sector, and trying to buy support from young people using debt relief is not a jobs policy. It’s pandering.