[I was able to dig up this post with some help from some friends. Thanks.]
The stable folks at the NY Times brought in five commentators to offer short critiques of the Dreamer-In-Chief’s plan to hide all of the pain in a closet for 20 years. Four of the five are largely negative offering better written, more polite versions of the blather I type here. Richard Vedder sees it as more subsidy for the bubble. Anya Kamenetz calls it inadequate because it doesn’t target the real problem, the insanely ballooning tuition bills. Neal McCluskey takes a hard-line, a deal-is-a-deal tack without bothering to hide it with tact. Cindy Warner uses it as a chance to talk again about the evils of compound interest– something the college industrial complex hero, Albert Einstein, called “the most powerful force in the universe.”
The fifth, Sandy Baum, is an economist for hire who comes up with airbrushed stats for the college industrial complex. Naturally she thinks it’s a good plan or at least a “step in the right direction.” For her, IBR is a magic salve that makes all of the pain go away and the only trouble is that wacko bloggers like me don’t know enough about it. She writes:
The strength of the anti-student-loan movement and the number of students defaulting on their student loans suggest a serious lack of awareness of the repayment protections already in place. Unemployed students don’t have to make payments. But that doesn’t help people who don’t know they have this option. And stories of people unable to wade through the bureaucratic barriers to entering the Income Based Repayment plan abound.
Saying that the unemployed don’t have to make payments shows how society likes to embrace magical thinking. In reality, the unemployed are going to have to make that payment sooner or later, just not at the particular moment that it’s due. And the government will cheerfully assess interest charges for deferring it. If the unemployed manage to make it 20-25 years without making enough money to pay off the loans, the rest of America gets to make the payment and that includes the former debtor. So the debtor is going to pay, although maybe not the full amount.
This whole plan amounts to sweeping the pain under the rug and pretending it’s not there.