This week on Politics: The Reality Television Show for Suckers we will be looking at HR 4170, the Student Loan Forgiveness Act of 2012. An innocuous piece of legislation that currently has strong backing by those with student loans this little bill is nothing more than a bank bailout packaged up in a warm and fuzzy sounding name. Any proponents of this bill are likely doing a double-take on that last line but rest assured I will explain. The trick of this bill lies in section 6:
‘(2) CONSOLIDATION OF PRIVATE EDUCATION LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN FOR CERTAIN BORROWERS-
‘(A) IN GENERAL- Notwithstanding any other provision of law, a borrower who meets the eligibility criteria described in subparagraph (B) shall be eligible to obtain a Federal Direct Consolidation loan under this
‘(i) shall include an eligible private education loan; and
‘(ii) may include a loan described in section 428C(a)(4).
‘(B) ELIGIBLE BORROWER- A borrower of an eligible private education loan is eligible to obtain a Federal Direct Consolidation Loan under this paragraph if the borrower–
‘(i) was eligible to borrow a loan under section 428H, a Federal Direct Unsubsidized Stafford Loan, a loan under section 428B, or a Federal Direct PLUS loan for a period of enrollment at an institution of higher education, or, with respect to a borrower who was enrolled at an institution of higher education on less than a half-time basis, would have been eligible to borrow such a loan for such period of enrollment if the borrower had been enrolled on at least a half-time basis;
‘(ii) borrowed at least one eligible private education loan for a period of enrollment described in clause (i); and
‘(iii) has an average adjusted gross income (based on the borrower’s adjusted gross income from the 3 most recent calendar years before application for consolidation under this section) that is equal to or less than the borrower’s total education debt (determined by calculating the sum of the borrower’s loans described in section 428C(a)(4) and eligible private education loans) at the time of such application.
‘(D) PAYMENT TO THE HOLDER-
‘(i) SECRETARY- For each eligible private education loan that a borrower is consolidating under this paragraph, the Secretary shall make a payment to the holder of such loan in an amount equal to the amount consolidated under this paragraph with respect to such loan.
‘(ii) HOLDER- Upon receipt of a payment described in clause (i), a holder shall discharge the liability on the loan consolidated under this paragraph in the amount of such payment.
Emphasis mine. Part (D) is the real meat of this legislation. If an eligible borrower decides to take advantage of this legislation and is approved the Secretary of the Treasury will use government funds to pay off the private holder of the loan. Effectively this bill grants private banks the ability to rid themselves of risky loans and thus avoid taking responsibility for any bad loans that have been made. This holds quite a bit of similarity to what was pulled during the housing market crash. Passage of this legislation will merely mean the government will transfer money to private banks.
I haven’t even explained the best part, this legislation has been gaining the support of those who have been opposing bank bailouts and demanding that the banks be held accountable instead of being allowed to socialize their losses. The state has effectively gotten many of those who oppose the banks and bailouts to support a bank bailout. It’s disgusting pure evil that is also beautifully elegant.
Somebody is likely to ask where the funding to pay off the banks is going to come from. That part of this scam is also well played:
SEC. 7. OFFSET.
Funds appropriated or otherwise made available for a fiscal year to carry out this Act and the amendments made by this Act shall be made available from the funds available for Overseas Contingency Operations.
What the hell are the Overseas Contingency Operations? Simple, the renamed War on Terror. So money appropriated for the defense budget, the most inflated and unaccountable budget in the United States, will be used to bailout the banks.
This episode of Politics has everything. You have the drama from students unable to pay back their loans, corruption in the state leading to its bailout of the banks, and irony in getting people opposing bank bailouts to support a bank bailout! My compliments to the writers.
Kudos to Adam Curry on the No Agenda podcast for brining this to light. It’s good to know that somebody is actually analyzing this crap while traditional media outlets continue to play the state’s game and report nothing of substance.