The student loan "take-over" legislation that was signed into law by President Obama on Tuesday could add $52 billion to the deficit between 2010 and 2020 when the cost of the market risk and administration expenses of the loans are taken into consideration.
Savings for taxpayers originating from the new student loan law are about $22 million lower under the “fair-value” figure than they are under the FCRA estimate. This leaves a discrepancy in figures. The savings are smaller on a fair-value basis because that measure, which takes into account the risks associated with those payments, assigns them a lower cost to the government and thus finds a smaller benefit from eliminating them,” said the CBO
http://www.cbo.gov/ftpdocs/108xx/doc10871/BudgetOutlook2010_Jan.cfm
So it's not difficult to see that education costs will not drop. Before signing the new law, President Obama acknowledged that colleges and universities would have to do their part in keeping tuition cost lower. However, when you decrease supply, price rises. When you increase demand, costs rise.
In federalizing student loans, President Obama has erased the incentive to shop for the best prices for higher education. This measure exponentially increases demand for more expensive schools, which in turn will raise tuition and college expenses. This means higher salaries for the professorial class that Obama and this administration really stands behind. The new legislation is more about helping college professors than students trying to fund their education.
Obama's legislation has cut banks out of the student loan process. Revenue for the loans has come either directly from the government or through private financial institutions, which have collected billions of dollars in federal subsidies to protect against default. When students default on government loans, the banks pass the loss on to the consumer.
Savings for taxpayers originating from the new student loan law are about $22 million lower under the “fair-value” figure than they are under the FCRA estimate. This leaves a discrepancy in figures. The savings are smaller on a fair-value basis because that measure, which takes into account the risks associated with those payments, assigns them a lower cost to the government and thus finds a smaller benefit from eliminating them,” said the CBO
http://www.cbo.gov/ftpdocs/108xx/doc10871/BudgetOutlook2010_Jan.cfm
So it's not difficult to see that education costs will not drop. Before signing the new law, President Obama acknowledged that colleges and universities would have to do their part in keeping tuition cost lower. However, when you decrease supply, price rises. When you increase demand, costs rise.
In federalizing student loans, President Obama has erased the incentive to shop for the best prices for higher education. This measure exponentially increases demand for more expensive schools, which in turn will raise tuition and college expenses. This means higher salaries for the professorial class that Obama and this administration really stands behind. The new legislation is more about helping college professors than students trying to fund their education.
Obama's legislation has cut banks out of the student loan process. Revenue for the loans has come either directly from the government or through private financial institutions, which have collected billions of dollars in federal subsidies to protect against default. When students default on government loans, the banks pass the loss on to the consumer.
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