Capping college loan payments at 10% of your income is just part of the equation in Obama’s new executive order. The other and more devious part is that any unpaid remainder of a student student loan is ‘forgiven’ after 20 years for most people. If you work for the government, it’s 10 years. And who pays for it then? Taxpayers.
Watch:
So let’s do the math on this.
SCENARIO A:
John Doe ends up with $55,000 in student loans to pay back at the end of his four years where he took Art History as a major. The only job John can get is one where he makes $1500 per month. John only has to pay $150 per month on his loan and he maintains around this level of income for the duration of his 20 years. At the end of 20 years John has only paid $36,000 of his loan. The remaining $19,000 gets ‘forgiven’ and thus paid by the taxpayer.
SCENARIO B:
John Doe ends up with $55,000 in student loans to pay back at the end of his four years where he took Art History as a major. The only job John can get is a government job where he makes $2,000 per month. John only has to pay $200 per month on his loan and he maintains around this level of income for the duration of his 10 years. At the end of 10 years John has only paid $24,000 of his loan. The remaining $31,000 gets ‘forgiven’ and thus paid by the taxpayer.
This isn’t simply a ‘bailout’ as Gretchen suggested in the clip above, this is redistribution of wealth, otherwise known as Obama’s fundamental transformation.