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Archive for Saturday, April 25, 2009

Obama pushes plan to change college loan system

April 25, 2009

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President Barack Obama exits after making comments on higher education Friday in the Diplomatic Reception Room of the White House in Washington.

President Barack Obama exits after making comments on higher education Friday in the Diplomatic Reception Room of the White House in Washington.

— President Barack Obama on Friday renewed his call for the government to stop backing private loans to college students and replace them with direct government loans to young people, a challenge to a decades-old program with strong congressional support.

Obama’s plan to eliminate the Federal Family Education Loan program could save $48 billion for taxpayers over the next decade, but critics warn it could turn the Education Department into a national bank. Lenders and some college officials oppose the proposal, which Obama backed as a U.S. senator and pushed during the presidential campaign.

“In a paradox of American life, at the very moment it’s never been more important to have a quality higher education, the cost of that kind of education has never been higher. ... Yet, we have a student loan system where we’re giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans,” Obama said at the White House.

He was joined by Stephanie Stevenson of Baltimore, a University of Maryland student, and her mother, Yvonne Thomas.

Under the current system, students at some colleges borrow directly from the government, while others get loans from banks, nonprofits or state agencies who in turn receive subsidies from Washington.

The president’s proposal would switch the federal student loan system entirely to direct lending from the government.

Obama acknowledged that the proposal was sure to find critics, given the financial stakes. He warned banks and lenders were “gearing up for battle. So am I.”

Republicans are concerned about the costs and even some Democratic lawmakers oppose the switch.

Sen. Lamar Alexander, chairman of the Senate Republican Conference, said ending a successful lending program and giving more power to Washington and Education Secretary Arne Duncan would not help students.

“Arne Duncan, I think, is the president’s best appointee. But as secretary of education, he should focus on paying teachers more for teaching well and creating more charter schools — that’s his agenda,” said Alexander, a former education secretary. “I don’t think Secretary Duncan came to Washington to be named Banker of the Year. The Department of Education should not be a $500 billion national bank.”

Higher education groups are divided, although a petition against the plan drew signatures from college loan officers around the country. Universities welcome more money for student aid, but about two-thirds of colleges use the subsidized lending program and some want to keep the program.

Comments

Godot 4 years, 11 months ago

The Obama Youth Brigade bill, H.R. 1388, aka G.I.V.E. requries that youth who receive student loans or government aid for college devote "at least 3 months" of service (note the purposefully vague term) to the volunteer "corporation" established by the bill.

There are many restrictions on the activities in which the Youth Brigade may participate, and I think the restrictions are good.....except all is undone with the very last provision in the section.

"10. Such other activities as the Corporation shall permit."

We have seen with TARP/EESA the havoc that can be wrought in a very short period of time when a non-elected entity is given the force of government to take and spend, without constitutional restraints. Such an arrangement has been, and always will be, a petry dish for the cultivation of the government equivalent of the swine flu symptomized by corruption and abuse of power.

The House has passed this very onerous and dangerous bill with bi partisan support. Apparently it is another boondoggle with a sweet name (GIVE), that few have bothered to read, much less comprehend. It will soon be set before the Senate, and is likely to win approval.

This bill must be stopped.

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mom_of_three 4 years, 11 months ago

I think what Scott meant is that he got stuck in a high interest rate student loan without any way of refinancing it to a lower rate, especially since he was paying it back. During Clinton's adminstration, he lowered interest rates and made it easier to re-finance but it wasn't open to everyone. If changes are made to the system. it should incorporate all borrowers, no matter how old the loans are.

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scott3460 4 years, 11 months ago

"So what's the alternative to your situation? I understand that your interest rate is not ideal, but that's what the free market seems to bear."

Well the banks (who had the loans backed by the US government & therefore stood no real risk of losing a cent) lobbied hard to make the interest rates lock in for all time and had their servants in the US Congress (mostly repugs, of course) see that that was accomplished. It would have been nice to be able to refinance the loans at current interest rates.

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ArumerZwarteHoop 4 years, 11 months ago

Intead of raising to task of makeing public school chidren ready for college, the gov will just buy the colleges and coddle the students and crank out more liberal morons?

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whiskeysour 4 years, 11 months ago

Scott. . . .is the system of charging interest unfair, or do you think the interest charged on school loans is simply "unfair" because your not enjoying paying it?

Did you freely, and willingly, accept the terms of the loan - or are you saying that you were somehow misled by the lender?

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LiberalDude 4 years, 11 months ago

"First, Obama has said (in a nationally televised speech I believe, though I'm uncertain which one) that he believes college education should be universal and guaranteed."

@ whiskeysour - Prove where Obama said this. I think you misunderstood him. I think what he said is what I've been arguing and that you agreed - that all students who work hard should have the opportunity to go to college regardless of their family income.

@ Mr_Nancy - Do you admit that you lied?

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SettingTheRecordStraight 4 years, 11 months ago

scott3460,

So what's the alternative to your situation? I understand that your interest rate is not ideal, but that's what the free market seems to bear.

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whiskeysour 4 years, 11 months ago

I mean guaranteed high school insofar as that is what I'm afraid college will be turned into, not anything that I support.

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scott3460 4 years, 11 months ago

"College students are getting ripped under the current system. Radio interviews have revealed lawyers and doctors have problems paying back loans. It should not be that way. Germany furnishes advanced education for those who want to pursue….doctors and lawyers etc etc.

The USA banking system screws wayyyyyyy too many people."

Case in point, I am stuck paying 9% on loans I first took out in the 1980's. The banks have the program rigged so that it is not possible to refinance. And, oh by the way, of course, I now make too much to qualify for a tax deduction on any of the loan interest.

Don't get me wrong, I am glad I got my education, but 30 years of payback at usury rates is excessive.

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barrypenders 4 years, 12 months ago

whiskysour? Do you mean gauranteed like high school?

The more people forced to go to college the better?

Obama is going to have to print more money to build more college buildings so that he can make those guys go to school.

I love Obama and the way he handles people.

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Flap Doodle 4 years, 12 months ago

Speaking of Barry and education: " 98. "Education Secretary Arne Duncan has decided not to admit any new students to the D.C. voucher program, which allows low-income children to attend private schools ... For all the talk about putting children first, it's clear that the special interests that have long opposed vouchers are getting their way." -- Washington Post, 4/11 99. Obama enrolled his daughters in a DC private school. " http://www.nypost.com/seven/04252009/postopinion/opedcolumnists/100_days__100_mistakes_166177.htm?&page=0

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whiskeysour 4 years, 12 months ago

I apologize for the storms taking me away from the computer, but I would like to point out a couple of things.

First, Obama has said (in a nationally televised speech I believe, though I'm uncertain which one) that he believes college education should be universal and guaranteed. Now I think he coupled that with some form of service or "payback" plan.

In my mind, however, that would make college education just like public secondary schools - poorly run, lacking quality staff (this is on a grand scale, I know individually there are wonderful teachers everywhere), with staff and students alike just "going through the motions."

Second, I don't know where you have formed your impressions of current college students but I'm in a college classroom 5 days a week. I see first hand students who do not take college seriously and would benefit greatly from it being their money paying for the courses instead of loans which they don't give a second thought about how/when they'll have to repay.

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LiberalDude 4 years, 12 months ago

@ Mr_Nancy - You wrote, "and half (at least now) of America does not see Obama as doing the right thing".

Why do you continue to lie? All the polls show way over 50% of people approve of the job Obama is doing.

http://www.realclearpolitics.com/epolls/other/president_obama_job_approval-1044.html#polls

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LiberalDude 4 years, 12 months ago

You don't know what I think, jumpin_catfish. I do love you and republicans and conservatives and all people, even those who I disagree with.

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jumpin_catfish 4 years, 12 months ago

liberaldude said Luckily most people don't think like you, jumpin_catfish! Many are finally coming to their senses and I put little stock in poll they are like the wind. By the way, earlier you said you loved everyone, typical liberal self righteous comment. You don't love me, you don't know me or "everyone". You hate republicans, conservatives and anyone remotely in favor of limited government (read the constitution) and you hate everyone who criticizes liberals like Obama Pelosi et al.I don't know you liberaldude and I don't "love" you although if you needed help and it was in my power to assist you I would. That is not love DUDE.

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Tom Shewmon 4 years, 12 months ago

"Obama is against the Fairness Doctrine so don't even bring that weak argument."- LiberalDud

Uh-huh, he was against torture hearings too until Pelosi, Reid, Leahy, Conyers, George Soros and moveon.org got to him. He is torn whether to fold like a cheap lawnchair to his base that got him elected or do the right thing, and half (at least now) of America does not see Obama as doing the right thing.

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LiberalDude 4 years, 12 months ago

You're right, we do agree on some points, whiskeysour.

You wrote "but the fact people believe the government should guarantee a college education to everyone.". I don't think anyone believes this. I don't and Obama doesn't. This might be want some of the idiot conservatives (Limbaugh, Hannity) want you to believe. College should be for serious students who want to work hard and better themselves.

I think that you are wrong in your views about today's college students. Just because some students that you know are careless and don't care about becoming "educated", doesn't mean that most students are this way. The majority of students out there are in college for the right reasons. Just because most students want to use their college degree to get a good job doesn't mean that they don't value the education.

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barrypenders 4 years, 12 months ago

All Obama has to do is print money. Then, give the fresh, crisp dollars, to every breathing grade student's parents to intelligently invest for later use in the government colleges.

The same handouts to grade students like his GM corporate handouts is all he has to copy!

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whiskeysour 4 years, 12 months ago

Yes, I think that we do fundamentally disagree on the issue. Having said that, however, your last statement seems to echo what I have been saying.

For example, you stated that " If a person wants to take out student loans to pay for college, they should have the right to do so."

I agree 100%, but as with all loans if a person cannot (or will not) pay the money back then there is a penalty. I am not opposed to loans per se, but the fact people believe the government should guarantee a college education to everyone.

Also, you state "I think the more educated American public that we have, the better".

I agree again 100%. I would counter, however, that the majority of college students could not careless about "education" and merely attend school to obtain a piece of paper which they believe ensures them a job. College should become glorified job training. . . vocational and technical schools can adequately fill that need at a fraction of the cost and students should utilize them to enhance job prospects.

As a society, we need to break the linkage between a bachelor's degree and occupational acceptance. Moreover, if an educated society is truly the goal the time to ensure that goal happening is far before students set foot on a college campus.

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LiberalDude 4 years, 12 months ago

The point is that most Americans are happy with the direction that Obama is leading us. I am one of those Americans.

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whiskeysour 4 years, 12 months ago

Nice comparison there LiberalDude. . . interesting to note that Obama shares the same 100 day approval rating as Jimmy Carter and that the highest 100 day approval rating of recent presidents went to Ronald Reagan. You'll find no quibbles from me with that!

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LiberalDude 4 years, 12 months ago

"The solution lies in fewer, more elite, students not a vast expansion in numbers."

I continue to disagree with you on this issue. I think the more educated American public that we have, the better. Also a person should be free to choose how they spend their money. If a person wants to take out student loans to pay for college, they should have the right to do so.

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LiberalDude 4 years, 12 months ago

Luckily most people don't think like you, jumpin_catfish!

Most people recognize that Obama is doing a great job!

http://people-press.org/report/509/obama-at-100-days

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jumpin_catfish 4 years, 12 months ago

America wanted Obuma and now we all are going to pay, literally. Stop the madness and get the demorats out of power before they destroy our nation. Next congressional election will determine if Americans have any sense or have we just become dumb sheep. And I don't want to hear this is Bush's fault, its been years of stupidity in DC. Term limits starts at the ballot box.

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whiskeysour 4 years, 12 months ago

No, I would not deny a loan to someone who a) had requisite grades indicating a good chance of success on the college level, b) clear career goals indicating a good chance of repayment, and c) the needed skills to carry through such a plan.

What I would advocate, however, is that college is not a place "to find oneself" and should not be undertaken lightly. There must be consquences to going to college which deter a vast majority of students who currently languish in programs simply because they enjoy their classes.

College has become like high school, compulsory (in many ways it is because employers are no longer able to use tests for employment and a B.A. has become a defacto qualificiation. For why this is the case, see the New Haven example currently before the Supreme Court) and as a result it is watered down.

The solution lies in fewer, more elite, students not a vast expansion in numbers.

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LiberalDude 4 years, 12 months ago

"Unfortunately todays student aren't willing to make that sacrifice"

You are wrong, whiskeysour. There are plenty of students today who work very hard and do sacrifice. Just because someone has to take out some student loans, doesn't mean that they don't sacrifice. Sure there are some lazy students like you describe but you shouldn't generalize like that.

Without student loans, many poor kids who work very hard in school and do well could not afford college. Are you advocating against loans for poor students?

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LiberalDude 4 years, 12 months ago

Fairness Doctrine

Hahahaha! More fear-mongering huh Mr_Nancy. Obama is against the Fairness Doctrine so don't even bring that weak argument.

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whiskeysour 4 years, 12 months ago

LiberalDude. . . read again what I wrote, in no way did I impy that it should be "just for rich kids".

The idea that someone has to work hard to make it through college, however, includes working outside the classroom. What I am saying is that there is an opportunity cost associated with higher education. If your willing to make the sacrifice of pleasure today for earning potential later by all means go. Unfortunately todays student aren't willing to make that sacrifice and continue to expect an ability to consume (tv's, cars, entertainment, etc) while in school.

Extending loans only increases this type of consumption. . . if students had to pay (whether by earnings or savings) they would more seriously consider their desire to attend college.

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Tom Shewmon 4 years, 12 months ago

Hey, I went to college on loans, I went to work and I paid them back. Nothing has changed, except for the far-left idealogues have a foothold in this once great nation thanks to evil people like George Soros and the far-left blogo, who is in charge of news programming for NBC and CNN. Wake up America before it's too late!

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Tom Shewmon 4 years, 12 months ago

Again, this is more obvious in-your-face Obama, Pelosi and Reid taking advantage of their unchecked power and pushing forth with the control of all institutional power (see Fairness Doctrine) in order to simplify the further indoctrination of America into the dark abyss known as the far-left. Why do you think there is tea parties and talk of secession? People are sick about this----at least half and that's just at the present.

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Richard Heckler 4 years, 12 months ago

College students are getting ripped under the current system. Radio interviews have revealed lawyers and doctors have problems paying back loans. It should not be that way. Germany furnishes advanced education for those who want to pursue....doctors and lawyers etc etc.

The USA banking system screws wayyyyyyy too many people.

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Tom Shewmon 4 years, 12 months ago

"Why even bring up Nancy Pelosi, she isn't mentioned in the article?" -LiberalDud

Because,

A. She handed the porkulus bill to Obama on Day One and generally tells him what to do or else he will have to fear the far-left, moveon.org and George Soros who are largely responsible for him being there and he apparently listens (torture hearings), and

B. You're not supposed to say bad things about other posters or people in the article. Nancy Pelosi deserves every word I say about her and is not in this article.

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LiberalDude 4 years, 12 months ago

"Institutions don't just appear, they cost money."

managial - What you don't seem to understand is that we are already spending money on student loans. Currently the federal government is subsidizing companies that provide loans to students. It is inefficient and these companies often take advantage of students. It would be much better if the government just keeps this money and funds more government loans to students.

This money isn't coming from the stimulus bill.

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managialamiseria 4 years, 12 months ago

And I'd like to go on record and say I seriously doubt if the federal government has anything figured out. They can't even make the post office profitable. Why don't obama's brainiac economists start by making the US post office profitable? After they've proven themselves, then I'll trust them with the big stuff.

Thowing money at a probem until it sticks won't work. Didn't for Bush, didn't for GM, won't for Obama.

They've already said if the first trillion doesn't work, then they're ready with the 2nd and the 3rd.

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LiberalDude 4 years, 12 months ago

"Here is a novel concept, if you cannot afford to attend college don't go." and "College should be expensive, and it should be for a few, not for all."

@ whiskeysour - I totally disagree with your views. College should be for all students who are want to work hard and better themselves through higher education. It should not matter how rich someones family is. College should not just be for rich kids!

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managialamiseria 4 years, 12 months ago

Institutions don't just appear, they cost money. His restructuring of the student loan (free market kinda) system would be part of the porkulus package.

If it doesn't work, we're all screwed.

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LiberalDude 4 years, 12 months ago

@ Managial - What??? If we save 48 Billion dollars it would reduce our debt not increase it. Obama's plan is good for students and good for reducing our National Debt.

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managialamiseria 4 years, 12 months ago

Obama has financial experts working for him who have already figured it out. Do you not like saving 48 billion dollars of tax payer money? I do.


Sure, I like saving. But the downside is trillions of dollars of debt and NOTHING to show for it. Kinda risky.

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whiskeysour 4 years, 12 months ago

Here is a novel concept, if you cannot afford to attend college don't go. To quote Caddyshack's Judge Smalls, "the world needs ditch diggers too."

In all seriousness, however, the fact that a solid vo tech education / profession (electrician, plumber, etc) can garner a better living wage than liberal arts majors should suggest an alternative path to the vast majority of students.

Before you all heap criticism upon me know a couple of things. 1) I am currently pursuing an advanced degree that will put me on the path to employment in a university setting. I have a vested interested in the continual attractiveness of a college education. 2) I have financed 100% of my education via scholarship, paid university positions, personal savings, and parental help. Am I enternally grateful for my parents support, of course. Did they plan their lives around sending me to college (I'm an only child 1st generation student) you bet. We as a society should not reward those without drive, dedication, and foresight. Finally, when there is no cost to the student involved in college, the committment to the experience is reduced greatly. College should be expensive, and it should be for a few, not for all.

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flamingdragon 4 years, 12 months ago

dear jonathon kealing, why are you constantly removing my posts? warning: this post will be removed within an hour. and now you are blocking people from e-mailing me. why?

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flamingdragon 4 years, 12 months ago

dear jonathon kealing, why are you constantly removing my posts? warning: this post will be removed within an hour.

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LiberalDude 4 years, 12 months ago

"Maybe we should take a deep breath and figure this stuff out before we leap"

Obama has financial experts working for him who have already figured it out. Do you not like saving 48 billion dollars of tax payer money? I do.

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managialamiseria 4 years, 12 months ago

oh gawd, the liberal poster immediately pulls the sexist card. Shut up dude, you're an idiot.

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grammaddy 4 years, 12 months ago

Excuse me managiwhatever, How was Liberaldude being hateful? By Speaking the truth??!! Fear-mongering has been the modus operandi of the right wingers for the last 8 years. I guess you're so used to it and so comfortable with it that the truth feels a little uncomfortable, huh.

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LiberalDude 4 years, 12 months ago

managial: I'm not a hater, I'm The Dude. I love everyone, even idiot, sexist conservatives like Mr_Nancy.

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managialamiseria 4 years, 12 months ago

How will the government save taxpayers $48 billion by not backing gov. loans and nationalizing the student loan system? Is that the amount of subsidies given to the firms who offer the loans?

Again, like healthcare, a complicated issue that is being addressed in a cavalier manner. Once you start pulling the oranges from the bottom of the pyramide, you don't know which orange is going to make the whole thing fall and scatter.

Maybe we should take a deep breath and figure this stuff out before we leap.

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LiberalDude 4 years, 12 months ago

The only evil is you Mr_Nancy and your idiot buddies.

Why even bring up Nancy Pelosi, she isn't mentioned in the article? You just dislike her because she is a woman leader. You are sexist.

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managialamiseria 4 years, 12 months ago

Liberals are so full of hate. What is that? They have no control over their emotions, they just spout. So typical LiberalDude, keep up the stereotype.

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Tom Shewmon 4 years, 12 months ago

You're all missing the main point. The school staffs will be so left leaning due to heavy-handed goverment intervention it will make the self-confessed left-winger professors of today seem inconsequential. The government under The Three Stooges have no shame in their agenda. Unchecked power is a power they're going to maximize to its fullest potential.

May the indoctrination go into hyper-drive!! (And god help us all).

Nancy Pelosi is THE most ignorant, arrogant, disgusting politician to ever slither inside the beltway. Unfortunately, lots and lots of dough and a far-left constituency got her where she is.

Will evil prevail?

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LiberalDude 4 years, 12 months ago

Ahh, I see that the idiot conservatives have made it to this article. You're fear-mongering "we're becoming socialists" McCarthyism scare tactics are as stupid now as they were in the 1950's.

Your predictions are figment of your imagination. I'll bet you all the money that I own that neither one of your predictions will happen during our lifetimes. Go back to the looney bin.

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managialamiseria 4 years, 12 months ago

This prez. wants control control control and the gov. has a history of muckiing up everything they touch. He's wanting to control all important consumer functions, banks, car companies, student loans, health care.

Hang on America, this is going to be a wild 4 years and will hopefully come to an end soon and we get someone in the White House who knows what the heck he/she is doing.

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Godot 4 years, 12 months ago

STRS, you left out a major detail: the free two or four year degree will be given only to those who agree to serve Obama for a period of 4 or 8 years.

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SettingTheRecordStraight 4 years, 12 months ago

Oh, and that community bank or local lending institution that you or a loved one works for - sorry, but your product has just been replaced by the federal government.

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SettingTheRecordStraight 4 years, 12 months ago

A prediction: The government will one day pay for every nickel of a student's two or four-year degree (at a government-run university, of course). The government will fund this regardless of a student's major or GPA, and those students who drop out or flunk out will not be required to pay back any of the tution that you and I subsidized.

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