Obama Commission Recommends End to Subsidized Student Loans

The National Commission on Fiscal Responsibility and Reform has issued a report that recommends the elimination of subsidized federal student loans in order to reduce federal spending. The recommendation is one of 50 that the bipartisan panel, which was created by President Obama and charged with finding ways to reduce the federal deficit, brought forward.

Federal subsidized student loans are government-issued student loans on which the government pays —subsidizes — the interest while a student is in school or in an approved deferment period. During deferment periods, which are granted on a case-by-case basis when a student loan borrower is experiencing financial hardship or other extenuating circumstances, the borrower isn’t required to make principal or interest payments on his or her federal college loans.

Subsidized student loans, awarded on the basis of financial need, are available to low-income students and students from low-income families. The President’s fiscal commission estimates that eliminating the federal interest payments on these subsidized college loans would save about  billion annually.

The proposal to eliminate subsidized federal student loans isn’t a recommendation to shutter the federal student loan program altogether. Federally funded student loans are also available in an unsubsidized form, and these unsubsidized student loans are awarded to eligible students, regardless of income bracket, who qualify for federal college financial aid to help them pay for college.

Do Student Loan Subsidies Benefit Students?

A growing number of policy groups support dispensing with federally subsidized student loans. The College Board recommended the same move in 2008, and some Democratic lawmakers also included the elimination of subsidized student loans in the initial draft of the student loan reforms that were enacted in 2009. The provision was dropped after student advocates and higher education lobbyists successfully persuaded House Democrats to retain the student loan subsidies.

Supporters of dropping the subsidized interest benefit say that subsidized student loans don’t do anything to make college more accessible to the low-income students to whom the loans are awarded, since borrowers don’t reap the benefit of the subsidy until after they’ve graduated.

Others who support the move to do away with subsidized student loans argue that student borrowers shouldn’t receive a benefit designed to reduce student loan debt that’s based on what the borrower’s family income was 10 or 20 years earlier.

Instead, proponents contend, already-available flexible student loan repayment plans like income-dependent payments, graduated payments, and repayment term extensions are more effective and fairer.

A new income-based repayment plan, instituted last year, is based on the student loan borrower’s post-graduation income, a better measure of a borrower’s long-term financial outlook.

Graduated repayment, in which a student loan borrower’s monthly payments start out low and gradually increase every two years — designed for borrowers who expect their income to increase steadily over time — is available to all borrowers of federal college loans, regardless of their family income at the time they attended college.

More Proposed Changes to Federal College Financial Aid

Eliminating federal student loan interest subsidies isn’t the only change the fiscal commission recommends. The commission’s deficit-reduction proposal would also put an end to payments to colleges and universities for the administration of campus-based federal financial aid programs.

Colleges and universities administer certain federal financial aid awards locally —Supplemental Educational Opportunity Grants, Perkins loans, and federally funded work-study programs. A school may retain as much as 5 percent of the federal financial aid funds provided for these programs to cover the cost of administration. Institutions that distribute federal Pell Grants also receive a small fixed payment to cover administrative costs.

Under the proposed deficit-reduction plan, the 5-percent administrative fee would be eliminated, and all federal funds would be delivered in the form of student financial aid, with no portion of those funds being siphoned away any longer in the form of administrative costs.

The commission’s rationale for eliminating these administrative fees is that colleges and universities benefit from federal grant programs because, unlike college loans, the federal grant dollars effectively increase enrollment by making college more affordable for students.

From Policy Proposal to National Law

The fiscal commission doesn’t have the final say on which recommended reforms are enacted. Currently, the commission’s report is in draft form. The commission must prepare a final recommendation no later than Dec. 1, 2010, and the final draft must have the approval of at least 14 of the commission’s 18 members.

Once the report is finalized and presented to the White House, legislators are expected to take up the recommendations and convert them into legislative mandates.

The commission’s recommendations are designed to balance the federal budget by 2015. If adopted, the recommendations would involve a broad set of austerity measures, including both spending cuts and tax reforms.

college loans, income-based student loan repayment, campus-based financial aid

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The Troubling Election of Barack Obama Part 4 of 6

In Part 3 of “The Troubling Election of Barack Obama”, I outlined points 1) to 6), the first six troubling actions of Barry Soetoro prior to his election.

In Part 4 below, I outline points 7) to 11), five more troubling actions of Barry Soetoro prior to his election.

7)Soetoro’s dubious comments regarding the separation of church and state

During the Bush years, federal grants given to religious organizations could be used by religious organizations to further their objectives.  The funds could be used discriminately to advance religious causes.  Bush’s position was certainly a position that would please more people among the right than among the left.

During July 2007, Soetoro said this about the separation of church and state:

“For my friends on the right, I think it would be helpful to remember the critical role that the separation of church and state has played in preserving not only our democracy but also our religious practice. Folks tend to forget that during our founding, it wasn’t the atheists or the civil libertarians who were the most effective champions of the First Amendment. It was the persecuted minorities, it was Baptists like John Leland who didn’t want the established churches to impose their views on folks who were getting happy out in the fields and teaching the scripture to slaves.”

In July 2008, Soetoro suddenly changed his position, announcing plans to actually expand Bush’s programs:

“Reaching out to evangelical voters, Democratic presidential candidate Barack Obama is announcing plans to expand President Bush’s program steering federal social service dollars to religious groups and – in a move sure to cause controversy – support some ability to hire and fire based on faith.”

“‘The challenges we face today … are simply too big for government to solve alone,’ Obama was to say, according to a prepared text of his remarks obtained by The Associated Press. ‘We need all hands on deck.’”

Remember, during his campaign, Soetoro was campaigning on a platform of honesty and transparency and change! 

To many left wing voters, the separation of church and state is extremely important.  Yet people actually voted for Soetoro!

Soetoro’s dubious logic regarding his 2001 vote against the death penalty for gang related activity

Chicago had a very serious problem with gang related murders.  In 2001, as a State Senator, Soetoro voted against a new law meant to crack down on gang activity.

Although some of Soetoro’s reasoning may be sound, one aspect is very troubling :

“‘There’s a strong overlap between gang affiliation and young men of color,’ he said. ‘I think it’s problematic for them to be singled out as more likely to receive the death penalty for carrying out certain acts than are others who do the same thing.’”

Can you believe that?!  One interpretation of what he said is that he thinks it’s wrong to target gangs simply because their membership includes more blacks and Hispanics than it does whites!

So is a main determinant in Soetoro’s eyes not whether a crime is committed, but the ethnic background of the person committing the crime? 

There are other flaws with his logic. Why doesn’t he apply similar logic when considering the benefits of the law?

If Soetoro really was concerned with the plight of blacks and Hispanics, wouldn’t action against black and Hispanic gang members, even if the action seemed unfairly discriminatory towards them, benefit the black and Hispanic community as a whole much more than it would benefit the white community?  Aren’t victims of gang activity much more likely to be black or Hispanic?  Wouldn’t blacks and Hispanics overall benefit from implementation of the law he voted against?  (I’m not suggesting that he should have voted for the law if he truly felt that the law was discriminatory…however, does it seem to you like Soetoro actually worries about the ethics of a decision?)

This was back in 2001.  In 2008, Soetoro was campaigning on a platform of post-racial change! And people actually voted for him!

9)Soetoro’s cold answer and indifference regarding a question about human life

During August 2008, Soetoro was asked at what point a baby should receive human rights. He answered by stating that an answer to that question was “above my pay grade.”

As sweetness-light.com correctly mentions, “If it is above his pay grade to answer questions about abortion, then where does he get off voting on the issue — as he has in the Illinois legislature?”

Addressing the cold personality of Obama, they continue by saying: “Mr. Obama’s answers are so generic he sounds like one of those computers that has been programmed to sound like a human being.”

During September 2008, Soetoro admitted the problem with his attiitude, and clarified by saying:

“‘It’s a pretty tough question,’ he continued. ‘And so, all I meant to communicate was that I don’t presume to be able to answer these kinds of theological questions.’”

Theological?  How is the question theological?  It’s about how one defines things and about costs versus benefits! Perhaps Soetoro could use a primer, beginning with my own article on the subject.

Soetoro’s indifference toward human life seems to be very troubling. And people actually voted for him! 

10) Soetoro’s birth certificate controversy prior to the election

Philip J. Berg  is a Democrat who “is a former Deputy Attorney General of Pennsylvania.”

During August 2008, Berg sued Soetoro, claiming that Soetoro is a fraud who was not eligible to be US President.  Such a lawsuit (especially coming from a Democrat), as well as the evidence in support of the plaintiff, should’ve been front page news and been scrutinized heavily!

Instead, the mainstream media buried one of the most important stories in history!

Shockingly, Soetoro refused to respond to the lawsuit by the December deadline! (Although that deadline was after the November election date).

Remember, at this very same time, Soetoro was campaigning on a platform of honesty and transparency and change!  Although the mainstream media was attempting to bury the story about the lawsuit, many people using the internet were aware of it, and larger numbers of people had by then been aware of the birth certificate controversy for many months.  And yet people actually voted for him! 

11) Soetoro’s flip flop regarding the embargo of Cuba

During this video presentation, presumably from 2004, Soetoro says:

“I think it’s time for us to end the embargo of Cuba…”

But then in August 2007, now speaking before Cuban-Americans, Soetoro said:

“the embargo was ‘an important inducement for change’ which he would not automatically remove as president.”

Remember, during his campaign, Soetoro was campaigning on a platform of honesty and transparency and change!  And yet people actually voted for him!  

In Part 5 of “The Troubling Election of Barack Obama”, I will outline points 12) to 16), five more troubling actions of Barry Soetoro prior to his election.

Written by NoSuchThingAsAnOpinion
I placed 74th in the world (out of millions of people) on a test measuring intelligence! I run www.NoSuchThingAsAnOpinion.com

Filed: Scholarship | Edu
tags: Barack, Election, Obama, Part, Troubling

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