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Peter Schiff - President Obama Announces Plan to Boost College Tuitions

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October 26, 2011 – Comments (16)

President Obama today announced a plan that will ensure students are able to commit to higher levels of federally backed student loans. By limiting student obligations to repay, and by passing more of the repayment burden onto taxpayers, colleges and universities will be able to continue to raise tuitions at a rate that outpaces nearly every other cost center in the American economy. The move will come as a great relief to an education establishment increasingly concerned that students might no longer be able to afford skyrocketing tuition rates.

The AP reported today that state support for higher education has fallen 23% after accounting for inflation over the last ten years, even as tuitions have risen 5.6% faster than CPI. This gap has been bridged by a whopping 57% increase in federal student loans over the same time period due to the increased cost of tuition and number of student enrollment.  

The Obama plan limits repayment obligations on those federal loans to just 10% of "discretionary income" which it defines as total income above 150% of the federal poverty level - currently translating to about $16,000 for an individual, or $33,500 for a family of four. The plan also limits the term of obligation to 20 years. These terms represent a substantial easing and acceleration of the terms in Obama's "Pay as You Earn Plan," which was just announced last year. 

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16 Comments – Post Your Own

#1) On October 26, 2011 at 6:12 PM, Varchild2008 (84.64) wrote:

Varchild2008's Global Education Reform Act of 2011

1)  Eliminate General Education Requirements.
Replace with 1 year "Apply what you learned" (in previous 2 years) course programs.

2)  No Public University/College/Junior College/ Tech School/ should fund the construction costs or post-construction costs, or any cost in any way related to housing for the University President or Vice President.

I.E.  Total elimination of Presidential Houses.

Eastern Mich. Univ's Pres. House cost $6.5 million in its 1st year of cost + landscaping + etc.

3)  No Public University / College / Junior College / Tech School / etc. should build and operate Campus Unions, also known as Student Unions.  Instead, they will be asked to pursue private sector solutions for providing eateries to students. 

Part 2:  No publicly funded eateries allowed.  All eatting places are to be private sector based only. 

A private company would have to pay for the cost to build a place on campus in order to open a restaurant or they would rent out some space.

What would go away is gigantic buildings costing $40 million that do not serve any edcuational benefits...  They just build these monstrosities just cause....

Students need places to eat....sure....They can go to Subway, QDOBA's, or whereever... No need to spend GOBS and GOBS and GOBS of money trying to provide an eatery place.

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#2) On October 26, 2011 at 6:15 PM, leohaas (35.73) wrote:

Schiff is a cynical SOB. I guess he really doesn't want poor folks to get their kids educated. Education is still the best way out of an environment of poverty. It is virtually the only way for poor kids to move upward in society.

Under the plan, successful students who thanks to their education find a well-paying job still need to pay back every penny they owe. Those who fail to secure a well-paying job can at least drop the burden of student loans after 20 years. I am happy to pay a little extra in my taxes for that purpose.

In this article, Schiff makes assumptions and then extrapolates from those assumptions. Using that strategy, you can "prove" anything, no matter how ridiculous.

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#3) On October 26, 2011 at 6:18 PM, Varchild2008 (84.64) wrote:

I forgot point #4.

4)  University Presidents should be paid no more than $150,000 in their first year of duty.  Thereafter, whenever the Board of Reagents so deems a pay raise for the President, it can not be more than the rate of inflation for that year.

Vice Presidents should be paid no more than $125,000 in their first year of duty.  Thereafter, whenever the Board of Reagents so deems a pay raise for the Vice Pres, it can not be more than the reate of inflation for that year.

At Eastern Mich. University, 1st time, 1st year of duty University President paid over $220,000.  Vice President made just under $200,000 1st year, 1st time.

This single reform would cut $150,000 per year in costs to Eastern Mich. University and who knows how much elsewhere.

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#4) On October 26, 2011 at 6:26 PM, whereaminow (42.76) wrote:

Oh cmon leo, really?  You're going to play the "it's for the poor children" card?

The worth of University degrees in the market is nowhere near the cost.  I am extremely thankful that I never completed a full time four year University degree, as the cost would have far outstripped the value.  If they still want a degree, almost all medium to large companies offer $5,000 per year (some less than that, of course).  If that's not enough to complete a degree in a few years or so, then perhaps the cost of tuition is too high.  Better chip in some of your own dough.  You're working, after all.

The poor and underprivileged get screwed by going to college, as they get saddled by debt they can't repay, or that far exceeds the salary they can command in the competitive market. 

Simply put, the whiners are the people that complain for the benefit of people they have never met and no knowledge of, and want us to provide for them, again, despite having no knowledge of the environment that these underpriviliged will be subject to after we have bankrolled their education. 

I get the occasional kid knocking on my door selling some newspaper to get points towards some scholarship or other.  With a smile, I like to inform that they don't need to go to college to be successful.  (Hey, if they are serious about sales they have to learn rejection anyway haha).

David

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#5) On October 26, 2011 at 6:30 PM, FleaBagger (29.37) wrote:

Leo - just because you're happy to help someone pay his tuition doesn't mean you have the right to force someone (or elect someone to force everyone) to do the same. Most of those going to college in the U.S. and most of those who will go to college in the U.S. are not poor in any meaningful sense - they will come from homes with 2-4 cars, 2-4 televisions, central heating and A/C, and the ability to buy food. This program is a particular kind of middle-class welfare to advance the agenda of getting everyone on one kind of welfare or another, so that no one ever considers opposing the State.

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#6) On October 26, 2011 at 6:45 PM, selfdestruct2 (50.61) wrote:

+1 REC for FleaBagger

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#7) On October 26, 2011 at 7:11 PM, sgperformer (< 20) wrote:

Obama continues to look for ways to crush the economy and kill the middle class American.  He is Dangerous to this country!

This isn't going to help anyone except for the Universities, who will continue to crush the middle class with stupid high tuition rates.

American middle class - I'm calling on all of you to get rid of this guy in the coming election!

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#8) On October 26, 2011 at 7:33 PM, mrbillCZ (< 20) wrote:

Amen sq....I went to a decent college, but couldn't afford it now, and the raise in tuition causes many of us business types to re-evaluate the ROI on this mess anyway, esp. since I took forever to pay back loans...but I paid 'em back.

It's time to look at entrepreneurial options that WORK, and not try and subsidize everyone, esp. those who overspent what they didn't have in the first place (including politicians).

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#9) On October 27, 2011 at 12:17 PM, kdakota630 (29.81) wrote:

Peter Schiff confronts some OWS protesters (scroll to bottom of clicked link for video):

http://hotair.com/archives/2011/10/26/fun-peter-schiff-confronts-occupy-wall-street-protesters/

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#10) On October 27, 2011 at 12:21 PM, kdakota630 (29.81) wrote:

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#11) On October 27, 2011 at 12:26 PM, kdakota630 (29.81) wrote:

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#12) On October 27, 2011 at 1:42 PM, leohaas (35.73) wrote:

No doubt there are a few folks out there who are happy they did not go to college, or did not finish their degree. And some of those are very successful at what they are doing in life, so they make plenty of money. But against each of those anecdotes, there is another anecdote showing the contrary. My wife, for instance, went to college later in life. Before doing so, she had no job security. After she did, she never was out of work, and immediately after graduating doubled her salary.

Here is the statistical evidence supporting my case: the difference between the average person with a Bachelor's degree and someone with just high school was (in 2010) $412/week, just over $21k/year, or close to a million over a life time. And the difference in unemployment is even more staggering: the high school only crowd is on average almost twice as liekly to be unemployed!

Of course, you can always reject these statistics and make up your own because I am using Government data...

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#13) On October 27, 2011 at 3:44 PM, JaysRage (90.49) wrote:

I think the Obama proposal makes a great campaign stump.   Let's make higher education more affordable.   Everybody should agree to that right.   Poor people can't afford tuition for colleges.   Let's make it easier for them.   Good idea, right?   

Wrong.  

Three big problems with Obama's program.

1) It does nothing to eliminate the waste in the public education sector.   Tuition is too high, compared to what is delivered.   A decent amount of that is waste.   This program will just encourage colleges to continue to be inefficient with their funds.  Afterall, it's all on the government's dime anyway.

2) This program does nothing to help students and parents move toward making rational cost/benefit trade-offs of the costs of education.   It approaches education as an entitement, rather than an investment.   There's nothing wrong with being forced to work to pay for college, before, during and after.    No one has a RIGHT to go to college.   Things are valued more when they are paid for, rather than given.

3) There is nothing about the quality of the applicant.    Just because you can meet the bottom level of acceptance doesn't mean that you should be in college.   I'm all for making sure that our best and brightest young people get a chance to be developed.   There are already some mechanisms for making this happen, however.   They are called scholarships and grants.   This program looks like it will be making it possible for mediocrity to be rewarded with free money.   The last thing we need to do is to continue to reward mediocrity with free money.    Participants in the program should required to maintain a certain grade-point average year-by-year in order to continue to qualify, and they should have to meet a higher quality standard than minimum entrance requirements.

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#14) On October 27, 2011 at 3:52 PM, JaysRage (90.49) wrote:

Here is the statistical evidence supporting my case: the difference between the average person with a Bachelor's degree and someone with just high school was (in 2010) $412/week, just over $21k/year, or close to a million over a life time. And the difference in unemployment is even more staggering: the high school only crowd is on average almost twice as liekly to be unemployed!

Great.   Fine.   I don't even disagree with the statistics.  What's to say that these people even qualified to attend college?   If they are unable to find work with a high school diploma, what's to say that they aren't still unemployed with a college degree at an expense of $80,000?   Under Obama's plan, if they don't earn, they don't pay.    People are not entitled to a college education.   It's something that is earned and/or paid for as an investment.     

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#15) On October 27, 2011 at 4:12 PM, leohaas (35.73) wrote:

Rage, you are missing a few points here.

1) The problem of expensive higher education is not so much a public education problem. Rather, it is a private education problem. State schools still provide the best bang for the buck. Private schools are a lot more expensive. Maybe that is because they are for-profit organizations?

2) Agreed that there is no right to college education and that education is an investment in yourself. But what I am asking for is opportunity. That is something entirely different. Obama's plan, though not perfect, creates opportunity, not a right. 

We are still talking about loans, not gifts. And what do you do if your investment fails and you have no way of paying your debts? You file for bankruptcy protection. Too bad that bankruptcy does not eliminate student loans. With Obama's plan, finally there is a way to deal with a failed education investment. 

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#16) On October 27, 2011 at 5:04 PM, JaysRage (90.49) wrote:

OK, then, let's add even more stipulations.

1) Government loans should not be provided for private education.

2) Let's get more stringent on approval of government loans to go along with the less stringent payment options.   The risk/reward on the part of the government then evens out.  

Right now, the government is the Fannie Mae of education, and this has the potential to spiral out of control.    The reason that government loans aren't covered under bankruptcy protection is because they aren't provided at market value rates.   The risk does not equal the reward.   This proposal has the potential to decrease the risk on the side of the borrower and put all the risk on the side of the government.    Schiff is right.   It's a recipe for disaster. 

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