Obama Student Loan Initiative Comes With Risk

Saying he can't wait for Republicans stalling on his jobs plan to jump-start the economy, President Barack Obama has vowed to push ahead with a series of executive branch actions in an attempt to get something done.

But the American people might want to be aware, particularly those who are college students, college students-to-be, or family of college students: Among Obama's big plans is a new student loan initiative he will announce on Wednesday.

And that's a problem, since guaranteed federal student loans have rather quietly become one of the very problems already plaguing this nation in hard economic times.

Consider that higher education isn't the ticket to a guaranteed job like it once was. Consider also that education costs have been rising far above and beyond core economic inflation, making it arguably less valuable. Student loans are the one debt that Americans can't get out of.

Once they have it, they always have it, until it's paid off.

The student loan abuses in the past decade didn't get the same attention that housing loan abuses got, but most in the financial industry know that what could be a good thing -- the government's guarantee to help Americans get an education -- was abused by the financial industry with the government's non-caring attitude in the same way that mortgages were abused.

But the problem cannot be handled the same way. If consumers get stuck with a bad mortgage that an overly aggressive mortgage agent pushed upon them, they have options for dealing with that through the legal system -- bankruptcy.

If consumers got or get stuck with massive student loans they can't pay off -- tough. It's theirs until it's paid off, and they have to deal with it even if it was part of a ploy.

Some may say that's fair enough, since they signed up for it. But just this week I talked with someone who had worked in the student loan business in the past decade. It was a game, he said, to push big loans to students and student families. Nobody cared if the investment was good, or if they could pay it off. That was their problem, he said.

He got out of the business for that very reason.

Now, the industry has been cleaned up, a bit. And Obama certainly has no plans of sticking it to families and students with his big student loan initiative that will be announced Wednesday in Denver. Of course not.

However, he does believe that is one thing that will get America's economy moving again. That's a problem, and here's why. Obama is trying to get America's economy moving again in part by passing more debt burden to debt-laden American consumers.

That's really no different than the tool that helped America's economy grow in the past decade, inflating into a bubble. The idea then was to make it easy for Americans to get debt, since money in their hands stimulates the economy. But that doesn't mean the people can afford it. That doesn't mean it's truly what's best for them.

Trying to grow the economy by pushing more debt onto the American people, particularly in an area where the debt is not always good -- student loans -- is a risky solution, with all the burden placed upon the citizens.

Student loans are needed, as they are an important tool for many who could not otherwise afford an education. But they shouldn't be a tool for growing or fixing the economy. They shouldn't be aggressively pushed. They should be available for the taking if someone needs them and wants them.

Because debt pushed upon the people should never be a White House initiative, even in the name of education.