Student Loans

In 2010, Obama signed a law federalizing the student loan program, claiming that the banks were needless middlemen and that the government could just lend the money directly and save truckloads of money. Critics said that the Education Department is ill-equipped to identify risks when making loans. Easy terms and high default rates forced the Congressional Budget Office recently to increase the program's cost by 7 billion — a 30% jump. The New York Fed reports that 11.5% of student loan debt was more than three months past due in Q2 of this year, which was up from Q1. By comparison, the 90-day delinquency rate on credit card debt is just 8.4%. The Department of Education that 6.9 million people haven't made a student loan payment in more than 360 days, which is up 6% from the year before.
Enrollment in income-based loan programs — which base monthly payments on current income and forgive any remaining debt after 20 years — exploded 56% in just the past year. The amount of direct federal student loan debt has climbed more than 600%. The Department of Education now manages a loan portfolio bigger than the entire loan business of JPMorgan Chase.