Student loans are a scam that redistributes income from the 99 to the 1 percent. That’s precisely why President Ronald Reagan reduced federal grants and forced more students to take out loans. Wall Street gave him a reason. The scam is simple.
A student takes out a guaranteed student loan. The loan is bundled along with others by banks like Fanny Mae, then they’re sold to Wall Street investment banks, like Goldman Sacs. Fanny may actually manage the loan for Goldman. Then the investment banks issue bonds that are backed by the student loans and sell the bonds to wealthy investors, such as hedge funds. The student makes their monthly payment, but much of that goes to the investor. In other words, income is being redistributed from students to the 1 percent.
This scam, by the way, is why governments have been slashing aid to colleges and universities. This forces them to raise their tuition, which compels students to take out more loans, so that more income can be redistributed to the rich from the 99 percent.
Now imagine this; since the loans are guaranteed by the federal government, when a student defaults on a loan, the investors get paid off while the government hounds the defaulting students for the remainder of the their lives.
Income redistribution; that’s the real reason why the government is encouraging people to go to college while forcing them to take out loans; the real reason has nothing to do with making the US more competitive, or to improve the standards of living for our citizens. If government officials were truly concerned by the competitiveness of US business, or improving the standard of living for most Americans, the government would be giving grants to students. But replacing the loans with grants would eliminate the redistribution “welfare or giveaway” program for the rich as it now exists.
That’s why Mitt Romney and Paul Ryan, like Barack Obama and Joe Biden, have no intention of stopping the student loan income redistribution scam. That’s why Mitt the Twit and Paul Ryan refused to answer the student’s question.