Another view of the student loan debt crisis
I have worked with Alan Collinge and Student Loan Justice Org. for at least a decade on student loan bankruptcy. This article was taken from the Tallahassee Democrat. This article has some numbers on who is impacted, which has been presented, and largely ignored here and other places.
United States Senator Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.), and Congresswoman Ayanna Pressley (D-Mass.) led their colleagues in reintroducing their bicameral resolution outlining a bold plan for President Biden to tackle the student loan debt crisis by using existing authority under the Higher Education Act to cancel up to $50,000 in student loan debt for Federal student loan borrowers. The resolution calls on the President to use executive authority to cancel student loan debt and ensure there is no tax liability for Federal student loan borrowers resulting from administrative debt cancellation.
Through the Higher Education Act, the president already has the tools he needs to meaningfully address the student debt crisis and forgive a portion of our nation’s student debt.
“Another view of the student loan debt crisis” | Opinion, Tallahassee Democrat , May 28, 2022.
Tallahassee Democrat columnist Bill Cotterell’s recent column (“Wiping Out Student Loan Debt is Inherently Unfair”) leaves out many facts about federal student loans that people really need to know to understand the problem.
It is a common misconception, for example, that student loan borrowers are generally younger, liberal, successful, and that cancelling student loans would be an unnecessary burden on the taxpayer for the benefit of entitled “snowflakes” who don’t need or deserve it.
This is completely wrong.
Recent Department of Education data shows most student loan borrowers are over the age of 35. And that people over 50 with student loans outnumber people under 25, and they owe 300% more, on average, despite having borrowed far less decades ago.
They also are not mostly liberal. Pew Research from 2014 and more recent Gallup data show that a slight majority of people who have been to college identify, politically, as either Republican or independent.
Also, the claim that cancelling loans will mostly benefit wealthy people who don’t need it is simply wrong. Seventy-five percent of all borrowers were “underwater” on their loans before the pandemic, according to Education Secretary Betsy DeVoss in 2019.
All borrowers were determined to be “financially needy” as a condition for getting the loans. More than 40% never graduated. Millions went to trade schools. The bottom 80% of earners hold 70% of this debt, whereas most PPP loans (75%) went to the highest 20% earners.
Cotterell and others can also rest assured that the taxpayers will be fine. The federal government has been profiting around $50 billion per year on these loans since Obama federalized the program in 2010.
While it is not known how much of the $1.6 trillion federal portfolio is unpaid principal, it is certainly a small fraction of the total. On balance, the taxpayers will have very little- perhaps no, net loss if the loans are cancelled.
We just shoveled trillions in pandemic stimulus into the country. This required money to be drawn from the Treasury and added to the national debt. The President can cancel federal student loans, however, without needing one dime from the Treasury, or adding even a nickel to the national debt. There is literally no easier or cheaper way to stimulate the economy.
Because bankruptcy rights and other core protections were stripped from the loans, they have become both viciously predatory and hyperinflationary. In Florida, for example, the debt has exploded to where the $119 billion in student debt that now hangs over Floridians exceeds the entire state budget.
This could buy Disney World (assessed value: $2 billion) nearly 60 times over. These numbers are cartoonish and obscene.
People who wag their finger at the people being wrecked by this rather than looking at the lending system itself serve only to defend the worst, most threatening, big-government loan scam in US History, and the colleges that profit obscenely from it. That’s not conservative.
Cottrell and others should instead fight for S.2598, a bipartisan Senate bill that will return constitutional bankruptcy rights to the loans. That would at least be a start to reining in this federal beast.