Student Loan Debate: Obama vs. Romney 2012

Normally, we here at Club Thrifty try to stay out of your political grill. However, with the third and final Presidential Debate of the 2012 election taking place tonight, we couldn’t pass up on this guest post by Jon Haver of! So, we hope you enjoy our debate before the debate. If you are interested in guest posting, please read our guest posting policy.


“We were so young, so in love, and so in debt,” recalled Michelle Obama at the Democratic Convention in September. Apparently the Obamas, like many of us, had to deal with a mountain of student debt with monthly repayments that came to more than their mortgage. President Obama, infers the First Lady, knows what it means to struggle with student loans. Governor Romney with his background, she also infers, will have trouble empathizing with the current issues facing American students. But that is the Democrats’ take on Mr. Romney’s experience with student loans.

Both Obama and Romney are desperately seeking the support of young voters in the run up to the election so some of the key talking points are, understandably:

  • access to student loans
  • forgiveness for student loan debt
  • cost of an education
Student Loan Debate - Obama vs Romney

Should the government intervene or leave the student loan market to reign?

The battle between the two sides boils down to the same old Republican/Democratic divide. Should the government intervene or leave the market to reign? Is fair distribution of the current pie preferable to everyone having a bigger slice of a bigger pie? Should the government help students or should students be encouraged to help themselves?

Mitt Romney’s Argument

Mitt Romney’s policies obviously tend toward the latter. In these days when it’s no longer possible to “work your way through college” (unless you’ve got a part-time job as Bill Gates), Romney sees greater market competition as the key to reducing the burden of student debt. He wants private as well as government lenders to offer loans to students in an effort to increase competition and drive down interest rates. He has also asserted that students should save, shop around and borrow money from their parents in order to go to college.

President Obama’s Response

Predictably, these comments were quickly set upon by Romney’s Democratic rivals with Obama spelling it out in a speech at Capital University, “I want to make sure everybody understands not everybody has parents who have the money to lend. You know, that may be news to some folks, but it’s the truth.”

President Obama’s Argument

Throughout his time in office Obama has worked to increase government support for those seeking higher education. He has extended Pell grants for low-income college students, meaning that 9.3 million students now receive financial support in comparison to 6.2 million in 2009 (Senate Committee Report). The grants themselves are also more substantial. “We’ve expanded Pell Grants for millions of people,” said Obama. “We did it by taking $60 billion that was going to banks and lenders as middlemen for the student loan program, and we said, ‘Let’s just cut out the middleman. Let’s give the money directly to students.’ And as a consequence, we’ve seen millions of young people be able to afford college.”

Mitt Romney’s Response

Mitt Romney, whilst not threatening to take away Pell grants, sees things differently. He may have had a point when he argued that “flooding colleges with federal dollars only serves to drive tuition higher”. Romney blames the lack of free market forces in education for rising tuition. Under Obama’s watch, without any incentive to keep fees down, universities have continued to increase the cost of tuition dramatically. This has dissuaded many of the young people who Obama supposedly champions, from pursuing a college education. Romney argues that if prospective college students had more access to information about the quality of the schools they plan to attend and the likely fiscal rewards of any future job possibilities, then universities would have to be more competitive and offer better value for money.


How Will Each Control The Cost of Tuition?

Obama, in response to rising tuition, has mooted the idea of price controls which would limit the loans available for attendance at a particular college if that college continues to raise fees disproportionately. He also wants to introduce a “Pay As You Earn” plan which caps monthly student loan repayments at 10% of a graduate’s monthly income and has proposed the idea of a Public Service Student Loan Forgiveness Program, which would write off student debt after ten years of payments for graduates who work to serve the public good, for instance as teachers. But can Obama deliver on his promises? Romney thinks not: “I’m not going to promise all sorts of free stuff that I know you’re going to end up paying for. What I want to do is give you a great job so you’ll be able to pay it back yourself. And I want to get the government off your back, so you can keep more of what you earned.”

So the battle continues, what is your opinion


Which candidate do you believe will be the best for college students struggling to afford an education? Pleae leave a comment below! After you do, vote on who you think will be a better President for students with a lot of debt – Vote Here & See The Results!



Jon Haver graduated college with $22,500 in student loan debt. He paid off his debt in 3 years, all while still continuing to live a full life. To read more about his story and his advice, you can find his website at


  1. says

    Tough call… The question is, which will stick to their promise? In Scotland we have free University education for Scottish Nationals – something I am forever grateful for!

    • justin@thefrugalpath says

      I am very jealous of free college education. If we were to offer that, or at least offer permanent citizenship to anyone who graduates a U.S. college from over seas I believe jobs that require more education would help the economy.

  2. says

    I tried to keep any political bias out of the article but thought I would way in on which Presidential candidate would be best for students with a crushing debt load.

    For the amount Federal Assistance I believe President Obama’s plan will provide the most support to students.

    For Job Creation I believe Governor Romney’s plan is most desirable.

    However, I don’t believe the president has much influence when it comes to the economy so I feel President Obama would be the best for students with a lot of student debt.

    Surprisingly the Poll on is sitting at 50 – 50 right now.

  3. says

    I think access to student loans is important, but when the government subsidizes loans it often results in higher tuition. The reason is simple: schools can charge more and pay professors more when there is more access to student loans. I think the government should subsidize less, though I do not know how they can change course at this point without drastic changes to the system.

    • says

      “I do not know how they can change course at this point without drastic changes to the system.”

      We didn’t get to this point through drastic changes – it was an evolutionary process that took decades. Why not just do the same for the inverse?
      I get disappointed when people use these types of statements as an excuse for doing nothing. If doing everything at once scares you – make incremental changes. This applies to everything from government to your own finances.

  4. says

    Interesting, I am actually writing a post on something very similar for later in the week. It’s a very tough call. The cost of college has gotten out of hand, in general, and I am not sure what the solution is. I think to have the option to have the loan forgiven if you go into a certain sector is a great idea. My youngest brother is actually just getting ready to take advantage of that himself. If he teaches for three years in a Title 1 school, then the government forgives all of his loans. Pretty nice deal if you ask me.

    • says

      Yeah, that is a decent deal. However, tax dollars are paying for his education. While I don’t have a problem with that, obviously the government cannot pay for everyone’s education. ….so we have to come up with broader solutions.

  5. says

    I don’t have faith that any candidate or President for that matter is going to do much to change things in the foreseeable future. I think it’s up to the student to find a school that he or she can afford, meaning community college or a state school if you don’t have grants or scholarships. Also, not to squash any dreams, but if you are going to be a social worker that makes $30K a year, you just can’t come out of school with 100K in debt. If you want to go to a private, out of state school, make sure you pick a major and future job that can support your payments. Students should also have to take a course in paying back loans and how much they are going to owe per month with each loan they take out.

  6. says

    I’m going to agree with Kim (what she said!). I don’t think either candidate is going to help much. Here’s what I believe: until colleges stop recklessly spending money and finding kids to pay for their overzealous approach, we won’t see any changes. I’m not sure a government can fix that.

  7. says

    I enjoyed this article, as it really is unbiased in what each candidate believes and will push. Although, I am at a loss for why college has pretty much doubled in price in 5-10 years. Subsidized loans may have something to do with it, but only minimally IMO.

    I think the problem probably comes down to what the purpose of higher education is. For universities the purpose is research and is what they spend their money on (not education). For the student it is education and job placement. I’m guessing (not sure) but the reason college has gotten so expensive is that $$ is being funneled to research and the student is paying for not only his education but research by professors as well… I would be interested to hear from someone who actually works in the system, and can shed some light on the reasons for tuition increasing at an exponential rate.

  8. says

    Here’s my problem with Romney’s line of thinking – not everyone is going to HAVE a job that pays high enough to really work at that student loan debt. Case in point – I went to an elite east coast university and then another elite school for my master’s (just paid my last loans off last week, WOO HOO!!!!!). I then went into journalism – and let me tell you, I was NOT making enough money, even doing the job I went to grad school to learn, to pay off my student loans without my husband’s and parents’ help. There are a lot of jobs like this, where you NEED a college education but won’t make a lot of money for the first decade or more of your career (I’m thinking explicitly teachers, but many law enforcement officers fall into this category as well). This is my underlying problem with Romney overall – he really assumes that everyone is going to go into a high-earning field like iBanking, and that’s just not going to work for everyone.

    • says

      My problem with his thinking on the issue is that he suggested that people stop taking out so many student loans and just borrow the money from their parents…. Some parents don’t happen to have tens of thousands of dollars laying around to loan out, Mitt. Wake up!!! =)

      • says

        His line of thinking is quite different on this, but in reality both candidates are very similar. We’re just pitted against each other, and it’s been working out for them ever since. The 2 party system doesn’t work, they know it, and take advantage of it. Just look at how angry people get every time the other person doesn’t share the same political views. We get into heated debates defending one or the other, when we shouldn’t be defending either.

  9. says

    I think they’re both barking up the wrong tree. There is no reason that college tuition needs to cost that much in the first place. Nor is there any reason that it needs to increase year over year beyond the rate of inflation. In 20 years, will the Middle Class even be able to afford college (even with loans)?

  10. says

    I hate to contribute to political horn blowing when both parties are just pulling at our strings to try to act emotionally here, but I must point out that “in an effort to increase competition and drive down interest rates.” is NOT the major problem students face. Sure, interest rates are important, and its nice if companies compete, but the main concern for myself as student not so long ago was having ENOUGH money to begin with to reduce my overall debt. If the government could assist and route some of that oil money towards our young people’s education, who am I to complain? But if all one wants to do is to reduce (for example) my interest rate on $100,000 loans, I’m still looking at $100,000 loans to pay no matter what the interest rate comes out to be. Reduce my tuition, not competition. Wow… that’s a good slogan, I think I’ll chant it at my local community college.

  11. says

    Promises are one thing and following through is another I think. I’m also of the belief that increased access to student loans is not necessarily a good thing if students are using them to get degrees that may not get them a job after school, particularly at for-profit institutions.

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