So David over at Blue Mass Group is in a fit because I uttered the following words in my promotion of the ObamaLoan takeover.
We must work to stop this assault on our freedoms to do business with whom we want when we want. It is now illegal for you to go to your local bank with the express intent of borrowing money from them so that you can use it for educational expenses. The free marketplace where provider meets customer has been usurped.
I admit my phrasing is wrong. It is not illegal for you to go to the bank with the express intent of borrowing money from them to use for an educational expense. You are now unable to do so with a product called a student loan, at a decent interest rate. So my phrasing was wrong. But the fundamental premise is still the same. You can no longer go to your bank to get a “student” loan. But can go for a much higher interest rate loan without the backing of the federal government.
Let’s look at the program as it was construed. you would go to a lender and obtained a government backed student loan. Which allowed that private lender to borrow money at 2.8% and lend to you at 6.8%. This was because their rate of bad loans would be very low because the Government backed the loans. Note the government did not borrow the money itself, only backed the loans.
David calls the above a subsidy. I wouldn’t term it a subsidy in as much as it is a guarantee. A subsidy would be the immediate borrowing of the money and flipping it. Kind of like what is going to happen now.
What I’m very confused about is how our good friend David can be against the original loan system but for the government being on the hook for all of the money. From day one. He tries to say it is going to save the government money. A likely story. Instead of that 4% spread going to help employee private sector employees at private sector wages across the united states, it is going to go to faceless bureaucrats in four call centers. Faceless bureaucrats that will make federal government wages, which are higher than private sector wages. The balance instead of being pumped into the economy as it is now in private hands, will go to pay for the bloated Obamacare. Socialized medicine is being paid for by socializing higher education funding.
Yeah that makes a whole lot more sense. Thanks for letting me clarify David.