Eager to broadcast some good news approaching the midterm elections, the Obama administration recently announced a welcome dip in student loan defaults, from 14.7 percent for the 2010 cohort (loans taken out in that year) to 13.7 percent for 2011. Policymakers, alarmed about how our trillion-dollar student loan burden and soaring default rates are undermining our economic growth, cheered the report.Why are the numbers bogus?
Unfortunately, it turns out the numbers are bogus.
There was a huge threat that many educational institutions that fall into the "politically correct" protected class were about to lose government funding, so the Obama administration changed the rules. Peek explains:
As of this year, schools with three consecutive years of default rates above 30 percent (or one year above 40 percent) will risk losing federal financial aid. The review was expected to clobber the for-profit sector, but also to penalize some smaller schools characterized by higher-then-average student borrowing, such as numerous members of Historically Black Colleges and Universities, or HBCU. Last year 14 colleges in that organization had default rates above 30 percent...
Though many schools adopted practices aiming to reduce defaults, some were still expected to fall below the government standard. Education Secretary Arne Duncan, speaking recently at a gathering of HBCU leaders, announced that because of changes to the way the numbers were calculated, none of the black schools would lose federal aid.
Since student loans aren't for the students but are for the institutions, it's natural that the traditional college establishment is anxious to destroy all other institutions and capture that speedy loans money for itself. That's the whole point of what the Obama administration is doing - nothing more and nothing less.
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