Is Obama’s new student loans bill good for students?

Short answer is no. Let’s analyze why.

The argument for the bill seems simple enough, right?

The Administration essentially wants to cut companies out of the game and run the system itself. Democrats claim the move will save $87 billion over 10 years, which can be used for a laundry list of education priorities, including increasing the maximum amount of Pell Grants, expanding Perkins Loans and investing in community colleges and other programs
But consider what increasing Pell Grants actually does.  In a free market, colleges would only be able to set their prices so high before demand decreased because people would not be able to afford tuition.  But when goverment starts giving out handouts for college, schools can jack up prices by the same amount.  This results in perpetually rising tuition no matter the state of the economy — and remember, not everyone gets a government handout, but they still have to pay the school they attend.
But don’t take my word for it.  Llisten to what great economist Peter Schiff has to say:

Loaning directly to students while reducing the amount a student is required to repay will actually encourage colleges and universities to increase tuitions even faster, as students will be more willing to assume larger debts which they are not legally required to repay.

Not only will this bill cause tuitions to rise faster, but contrary to Obama’s claim, it will substantially increase the cost to taxpayers who will be forced to pick up a much larger share of inflated tuitions and absorb bigger losses on defaulted loans.’

Ahh…this is like a breath of fresh air while Obama’s rhetoric is the same political smog we’ve had for years.

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