Yet another outside Republican presidential candidate is weighing in on student loan policy, badly.
According to a piece by Ashley Killough at CNN:
At an education forum in New York Thursday, GOP presidential hopeful Newt Gingrich called President Barack Obama’s new student-loan proposal a “Ponzi scheme.”
Part of Obama’s plan would expedite a law that would forgive outstanding student loans after 25 years of payments. The current law is set to take effect for loans starting in 2014, but Obama wants to move it up to 2012 and change the number of payment years to 20, instead.
He said the plan appeals to students now, but by the time they will “have to pay off the national debt” as taxpayers when they’re older, Obama will be long gone. “It’s a Ponzi scheme even by Gov. Perry’s standards,” Gingrich said, also making a quip referring to Texas Gov. Rick Perry, who’s repeatedly described Social Security as a Ponzi scheme.
What? Just look up the term, Newt.
A pyramid scheme is a form of fraud that involves promising participants payment or services, primarily for enrolling other people into the business model, rather than by making an actual product or investments. This is just limiting payment to a percentage of income and offering debt forgiveness after two decades.
Even if one thinks Obama’s new policy on student debt is a bad idea, and many conservatives do, it’s not a “Ponzi scheme.”
It’s not sold as an investment strategy, it doesn’t require more participants to be sustainable, and it doesn’t ever promise that members will make money. [Image via]