For anyone who has actually read lil Lizzy Warrens refinance plan, i have come to this hypothesis... am I wrong or are us taxpayers getting screwed again? Under current law, regulations cap what students can be required to repay at just 10 percent of discretionary income. After 20 years, they can be granted loan forgiveness (just 10 years for those in public service). Warren’s plan would expand the Department of Education’s Direct Loan Program to refinance both public and private student loans. The feds would pay off private lenders and issue low-interest government loans to take their place. However, the plan would essentially allow Washington to seize the profits of private lenders, who already have to compete with artificially low interest rates on taxpayer-funded, federal loans. According to the Congressional Budget Office (CBO), the plan would encourage students to delay their student loan repayments, resulting in eventual loan forgiveness, “features of the income-based repayment plans offered under current law.” The CBO found it would also “increase direct spending by about $58 billion” over the next decade, which likely underestimates the long-term cost to taxpayers because the CBO does not use fair-value accounting to accurately measure risk. Not only will taxpayers be taxed according to the Buffett Rule, but they will be subjected to a greater degree of risk, especially because Warren’s plan fails to use fair value accounting.
Posted on: Thu, 17 Jul 2014 18:58:59 +0000
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