Posted on 12/08/2024 5:50:32 AM PST by george76
Proposal uses ‘hardship’ as the rubric for granting student loan forgiveness.
Joe Biden’s Department of Education has proposed a student loan forgiveness plan to take effect after President-elect Donald Trump takes office in January.
While the Department of Education puts the estimated cost at $112 billion, one analyst called it a “gross underestimate” and suggested the cost could be five times larger.
An economist and public policy analyst who spoke to The College Fix also criticized the regulation as “worrisome.”
The department opened comments on Oct. 31, just days before the election. The comment period for the proposed regulation just closed on Monday, Dec. 2. It has been in the works since at least February.
According to the new proposal, this act would “specify the Secretary’s authority to waive all or part of any student loan debts owed to the Department based on the Secretary’s determination that a borrower has experienced or is experiencing hardship related to such a loan.”
The Education Department uses a broad definition of “hardship” as that which is “likely to impair the borrower’s ability to fully repay the Federal government” or that which “renders the costs of enforcing the full amount of the debt not justified by the expected benefits of continued collection of the entire debt.”
Because of this, the final costs are not calculable, according to American Enterprise Institute economist Preston Cooper.
“The subjective nature of the proposal is worrisome,” Cooper told The Fix via email. “Whether a borrower is in ‘hardship’ is left up to the discretion of Education Department bureaucrats.”
While the official cost estimate of the proposal is $112 billion, Cooper told The Fix that “independent analysts at the Committee for a Responsible Federal Budget have estimated that it could cost as much as $600 billion [over the next 10 years].”
The committee submitted its analysis as a comment to the proposed regulation.
“It’s likely they will adopt a maximalist standard of ‘hardship’ in order to forgive as much debt as possible,” he said.
An analyst at the center-left Progressive Policy Institute said the proposal “creates a back door for blanket debt cancellation.”
The estimated $112 billion cost is a “gross underestimate,” Ben Ritz, vice president of policy development for the think tank, told The Fix via email.
A staffer at the Department of Education directed The Fix to a specialist for comment. They have not returned a voicemail request for comment.
President Joe Biden has attempted several student loan bailouts while in office, most notably his 2022 proposal to forgive up to $20,000 in federal student loan debt for Pell Grant recipients, and $10,000 for others earning less than $125,000 annually.
The administration cited a 9/11-era law that allowed for loan modification in cases of “emergencies.” Biden said the coronavirus outbreak gave the Department of Education wide authority to bailout student loan borrowers. The Supreme Court did not buy this argument and struck down the plan in 2023.
Another student loan bailout, called the Saving on a Valuable Education plan, is currently frozen due to legal challenges.
Prior to the massive bailout in 2022, taxpayers had already absorbed more than $32 billion student loans since Biden took office in January 2021
...
However, some data points suggest people are not being “literally crushed,” by their loans, as White House Press Secretary Karine Jean-Pierre suggested in May of this year.
A report from Mission Square Research Institute, which supports public programs to pay off student loan debt, found “15 percent [of workers] across both the public and private sectors missed their student debt repayments three or more times in the past six months,” as The Fix recently reported.
Meanwhile, recipients of a student loan bailout said they planned to use the money to take a vacation, go out to eat, or buy drugs.
Recipients of the student loan pause that began under President Donald Trump in 2020 also used the opportunity not to pay off debt, but to take on more loans, a University of Chicago study found.
Last Biden pardon of student loans
Another scam to get the slackers to become democrats for the votes we seen how that turns out chaos.
Allow us to withdraw $100k tax free from our 401k’s and call it a rich tax cut-I don’t care. Two can play this game. Better we spend it than the government AFTER our minimum withdrawal required.
Trump policy should be all degrees presented by any persons whose college load debt was forgiven, will not be applicable to any federal job. If the degree is not worth the cost to the former student, it isn’t valid as a credential to the public.
Why is it everyone else’s responsibility to pay some stranger’s bills? Mr. b and I always paid our tuition at the beginning of each semester and saved for our kids’ tuition. But nooo, we’re supposed to now pay for everyone else’s who did nothing but take the bare min. of hours and party the whole time. I took the max 21 hrs every semester and went in the summers to get out from under the expense so graduated early and was out working my career and on my own at 20. But now, was I ever stupid when I could have been out every night and using the loans for 365 day vacations on somebody else’s money.
What does he care? It’s not his money to buy votes.
The federal government is cancelling debt obligations for students, but the schools are still getting paid by the government as guarantors. And that government money of course is taxpayer money.
Who then, donate to Democrat candidates running for office, and build new wings, named after prominenet Democrats.
I’m not understanding how, after SCOTUS slapped Biden down twice about this, how they’re gonna try it a third time.
Executive Order those “forgiveness” deals out of existence.
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