Student loans a trillion dollar ticking time bomb?

Published Friday, November 30, 2012 / The Five

This is a rush transcript from "The Five," November 30, 2012. This copy may not be in its final form and may be updated.

ERIC BOLLING, CO-HOST: Welcome back.

America's youth, the future of the republic, smart as whip. Watch.

(BEGIN VIDEO CLIPS)

JESSE WATTERS, FOX PRODUCER: Who is your favorite Founding Father?

UNIDENTIFIED MALE: Abraham Lincoln.

WATTERS: Abraham Lincoln?

UNIDENTIFIED MALE: Well, he's not a Founding Father. Isn't he the first president?

WATTERS: No.

WALTER MATTHAU, ACTOR: I want to get this down on a tape recorder because nobody is going to believe me.

UNIDENTFIED FEMALE: George Washington.

UNIDENTIFIED FEMALE: What is a Founding Father?

DAVID SPADE, ACTOR: Hi. I'm Earth. Have we met?

WATTERS: What is Ben Franklin famous for?

UNIDENTIFIED MALE: Hundredth president?

(END VIDEO CLIPS)

BOLLING: Oh, genius. Not Jesse Watters, those geniuses are racking up student loan debt at a record and dangerous pace. In fact, the student loan debt now sits perilously at trillion dollars. And guess who gets tapped when that time bomb explode? Yes, you.

I mean, Dana, we're talking about this off-air for long time. Some of the problems, a trillion dollar, 93 percent of student loan debt is held by the government.

DANA PERINO, CO-HOST: That's right. And President Obama actually made it more so, because he took out the private lending this past year. So, you have a lot of kids who are going -- they want the college experience. The big college experience. OK?

They finished. They can't find jobs. Unemployment -- the youth unemployment rate is something upwards in the 40 percent area.

So, they can't find jobs and so they can't pay back their student loans. So, when it's all to this point and so bad, the government usually will come in and bail everybody out. So then you have no incentive to pay it anyway. And I think I -- just reading the tea leaves, I think the bailout for students are coming.

BOLLING: Andrea, President Obama, I remember this, when he was campaigning, he said, if you elect Mitt Romney president, the Pell Grant program is going to go, or it's going to be severely trashed. We found out today the Pell program, Obama is bringing it back, 18 semesters now down to 12. He's actually cutting the Pell program.

ANDREA TANTAROS, CO-HOST: Yes. Well, are you really surprised?

BOLLING: No.

TANTAROS: Another thing about the student debacle is the universities are really taking advantage.

PERINO: Yes.

TANTAROS: We have not learned anything from Freddie and Fannie, but the universities have. If they have a government that's saying, we're going to make all those cheap credit readily available that you don't to pay back, what are they doing? They're going to say, we're going to hike up our tuitions every year.

And it's really not on the education. I mean, the history of bubbles is a very integral course, I believe, Brian, but they are spending it on climbing walls, latte bars, expensive salaries for these liberal professors to jam this down their throat. And they are taking advantage of the parents and students -- which bring us to a question, should every kid really be going to college or is it a stick up for parents now?

BOLLING: This is a very good question. I'm glad you said that. Can we pull up that full screen? The spokesperson for Arne Duncan said this, it's almost unbelievable. He said, "To make student loans -- the goal is to make student loans available to as many people as possible." And require minimum credit scores that would block many Americans from going to college.

Bob, it sounds exactly -- exactly what Barney Frank said in 2003, 2004, and 2005. Get everyone in a home and a home loan.

BOB BECKEL, CO-HOST: The alarmists around this table are really getting me nervous here. The only 11 percent of the student loans are over 90 days late.

BOLLING: Which is higher than any other --

(CROSSTALK)

BECKEL: In the middle of a recession, or coming off a recession rather. You've got -- it's not at all, you're not going to have a big bomb like that. These people are going to get jobs and they're going to pay back student loans. And by the way, to have Jesse Watters go out in a beach with a bunch of floozies and says that represents American college students --

(CROSSTALK)

BOLLING: Brian, no -- the government demands no collateral no, credit --

BECKEL: So what?

BOLLING: How about this one? Parents -- the parents plus program. A parent can take out a loan for the kid's student debt, but the kid graduates from college. He is not on the hook for the loan. The parent is. If the parent walks away, he still keeps his job and no loan.

(CROSSTALK)

BRIAN KILMEADE, GUEST CO-HOST: I think they are all hoping that they walk away and the government is going to have to pay for everything. I was staggered to find out that 20 million kids go to school and 12 million of them borrow money to go to school.

And the question is, as Senator Corker brought up, should we be piling debt on these students? The well-meaning kids that want to go to school and get told, you can get $5,000 loan --

BECKEL: What are we supposed to do? Let them go become -- go to barber school?

KILMEADE: Well, I think you got to do two things.

(CROSSTALK)

BECKEL: I love trade schools.

KILMEADE: I would like to see pressure and accountability when it comes to why these schools go up $55,000 a year, number one.

TANTAROS: Yes.

KILMEADE: Number two, I would like to find out, number one, if these students are going to be going to these colleges, if there could be some consultants there to say, listen, your family only makes $45,000 a year. I'm not sure you want to get out in four years and owe $32,000.

BECKEL: But that's just ridiculous argument. They make $45,000 a year, so we don't want you to make that, anymore money than that. You are penalizing kids who come from families that don't have that kind of money.

KILMEADE: I would have to love to have gone to NYU, I couldn't afford it.

BOLLLING: Exactly.

KILMEADE: So, I can't go. I don't want $22,000 a loan a year to go to a university with more prestige.

BECKEL: I cosigned a student loan for a girl who died in a boating accident, right? I'm on the hook for it. I have to pay it back.

BOLLING: That's different.

BECKEL: Why?

BOLLING: That's different because you cosigned and they probably checked your credit and made sure you had collateral. That's s where the system worked.

Dana, the other part of the problem is these people can walk away. They know -- more and more know they can walk away. A hundred -- Bob says it's only 11 percent. The number is actually $120 billion that are teetering on the brink of default.

PERINO: That's right. So, my instincts would have been to open up the private sector market to allow for more competitive loans, instead of having it be government generated. I also think on the gubernatorial level, there's some very interesting creative things that are being suggested.

For example, Governor Rick Perry recommends and is working with the state colleges there, how can we get a $10,000 degree? Four-year, $10,000 degree in a state colleges are working toward it. That means that opens up a whole new world of people so they're not saddled with debt when they try to leave, because that just weighs them down.

BECKEL: That's a good idea.

BOLLING: Can I ask Andrea very -- I know we are running out of time, but what about President Obama when he picks and chooses what type of energy we should be able to use? How about he tells colleges, you slow down the rate of increase and tuition, the way it's outpacing everything?

TANTAROS: Well, he does that in every State of the Union. But again, what are his words matter if they're not followed up by actions?

I think this is actually a winning issue by Republicans. It something that affects parents, grandparents, kids. This would be a winning issue if they actually hold up some of these universities and these universities for president and professors and talk to them about how much they are making, what they are teaching and put them on display.

(CROSSTALK)

TANTAROS: Bob, I know you don't think it's a big deal but student loan debt --

BECKEL: A lot of the student loans go to auto mechanic schools, to airline mechanic schools. There's a lot of trade schools here that get a lot of these money. So, it's not like a bunch of liberal --

BOLLING: You got the last word, Beckel.

BECKEL: That's important.

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