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Vice President Talks to Students about (what else?) Student Loans

Posted By Cliff Tuttle | November 5, 2011

No. 749

Our junior colleagues at Third Chair: Pittsburgh brought to our attention last night that the Vice President went to Pitt yesterday and talked about student loans rather than the Jobs Bill.  [See our out-of-date comments on the Jobs Bill speech, two posts below.]

I say “junior” to point out that student loans are a hot topic for younger lawyers, who frequently took on debt equivalent to a home mortgage in order to complete seven or more years of higher education.

Lets give the Vice President credit for flexibility here.  Everybody knows that this was to be a political speech.  The Jobs Bill is dead, always was, and the sole purpose of the Vice President campaigning for it  is to energize the base — voters who will be needed if the Obama-Biden ticket is to carry Pennsylvania in 2012.  So, like the able politician he is, the Vice President selected an alternate  homily on a subject dear to the heart of his audience — student loan payment relief.  It also had the benefit of being a good news message.  Student loan payment caps and terms were being liberalized, to the benefit of the borrowers. [Get the details from Third Chair: Pittsburgh.] But of course, this was going to happen anyway, whether or not he spoke to the students at Pitt or anywhere else. As we stated at the top, this was a campaign speech, intended to energize the base.

However, for the rest of us who are not paying off student loans, it serves as a reminder that today’s graduates, especially those with advanced degrees, are starting their careers saddled with debt that would have seemed impossible not too many years ago.  This may work itself out in times of prosperity, but not so well at a time when too many of our best educated workers are not working.

What to do?  Rather than looking for ways to create incentives for existing employers to hire more people, why not create incentives for the unemployed to hire themselves?  This is not without precedent.  By going to graduate school, graduating seniors postponed repayment of their undergraduate loans.  That made sense, and it still makes sense, since it created a more highly educated workforce.  By postponing repayment a little longer (say, five years) for those who start their own business, we are putting that educated workforce to work.  Yes, it will cost something.  But so do the other incentive programs.  The difference is, some of those new businesses will take root, grow and prosper.  Jobs “created” by subsidies usually disappear after the subsidies end, that is, unless there is an independent demand for the goods or services produced by the worker.

But then again, those new entrepreneurs would eventually move to the suburbs and vote Republican. Oh well, sorry I mentioned it, Mr. Vice President.



CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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