Posted on 04/24/2022 5:04:41 AM PDT by MtnClimber
The federal student loan program has been back in the news lately. On April 6 the Biden Administration announced the extension of the “pause” on payments of principal or interest federal student loans through August 31. Does anybody believe that when August 31 comes the “pause” will not be then extended yet again at least through Election Day in November? Supposedly this is a matter of Covid “emergency.” Is this particular branch of the Covid “emergency” ever likely to end?
Over in the progressive wing of the Democratic Party (and is there really any other wing today?), even the indefinite “pause” on repayments just doesn’t seem to satisfy. There, the catchword is “cancellation.” In the run-up to the Biden April 6 announcement, Vermont Senator Bernie Sanders stated his position in a tweet: “Cancel student debt. All of it.” Massachusetts Senator Elizabeth Warren weighed in in a widely-cited New York Times op ed on April 18:
Americans support providing some student loan debt cancellation — an action the president could take entirely on his own. Doing so would lift the economic outlook for too many borrowers who still weren’t able to get a college diploma, for the millions of female borrowers who shoulder about two-thirds of all student loan debt, and for Blackand Hispanic borrowers, a higher percentage of whom take on debt to attend college compared to white students, and have a harder time paying it off after school. With the stroke of a pen, the president could make massive strides to close gender and racial wealth gaps.
Senator Warren does not enlighten us as to where the President gets the authority to cancel student debt “entirely on his own.” I suspect that the Supreme Court would disagree.
Federally-guaranteed student loans seemed like such a good idea when the program got started. Many of the best and brightest would benefit from college, but could not afford the cost. With federal support via guaranteed student loans, the young people could maximize their potential, and society would benefit at the same time from their increased productivity. The cost to the taxpayers would be minimal because the borrowers would have to repay. What’s not to like?
And then it all turned into a gigantic honeypot to be used for vote buying.
Let’s have a brief review of prior Manhattan Contrarian coverage of the student loan situation. In the very first month of this blog’s existence, November 2012, there was a post titled “Out Of Control Student Loans.” At the time, the total amount of outstanding federal student loans had just passed $1 trillion. The post asked “Any chance of getting the trillion back?” At that time, the official default rate had just shot up from about 6% to 11%.
I returned to the subject in an April 2015 post titled “Federal Student Loan Update: How Huge A Disaster?” The outstanding amount of the loans had crept up to about $1.1 trillion, and the default rate was skyrocketing. Excerpt:
We are now seeing how fast this kind of pushing of "free" federal money can blow up and explode. . . . You almost can't believe how fast this is going south. According to . . . Education Department data as of June 30, 2014, the delinquency/default rate had reached 18%. Oh, but with another 34% in deferment, forbearance or bankruptcy, meaning that of those supposed to be repaying, almost 27% were in default.
The next post was in October 2018, titled “Something The President And Congress Should Pay Attention To: Student Loans.” Now the amount of loans outstanding had reached $1.5 trillion. The program had begun in 1966. I remarked: “46 years to go from zero to the first trillion, and just five and a half years to add the next half trillion.” The post cited a study by The Brookings Institution projecting that by 2023 the default rate could reach 40%.
Well, here we are in 2022. The amount of the outstanding student loan debt is now given as about $1.7 trillion. Nobody knows the default rate anymore, since the obligation to repay has been suspended since a Trump administration emergency Covid order in March 2020.
I’m betting that the payment moratorium will remain in effect at least as long as Biden is in office. A long enough moratorium gets pretty close to cancellation. The money goes to a core Democratic constituency, recent college and graduate school graduates, to buy their loyalty. A Brookings study from October 2020, based on data from the Federal Reserve, gives information on who benefits by income quintile:
Other data in the Brookings study indicate that as of 2019, 56% of student loan balances were owed by people with graduate or professional degrees, and another 29% by people with bachelors degrees.
The first line of that Elizabeth Warren New York Times op ed was “Democrats are the party of working people.” Not really. The proposed student loan bailout is a handout to the relatively wealthy, with the “working people” almost entirely on the paying end of the equation. But then, in progressive world, it’s all free money, so why does it matter?
I paid my way through college and graduated with no debt. Maybe politicians can work to get the education establishment to eliminate useless positions so the cost will be reasonable again.
Government doesn’t have any money. That’s taxpayer money.
Students should be given much wider options in terms of vocational tech training, apprenticeships and trade schools in conjunction with their sophomore through senior years.
This “pause” has nothing to do with covid. Never did. The covid crisis was blown all out of proportion precisely so they could use it as a cover to enact their favorite social programs. They were “temporary” at first, then delayed a bit as long as they were able to keep covid in the news, and will become permanent as soon as dems feel they have fooled enough people.
Student loan “pause” is about government takeover of colleges.
Eviction “moratorium” is about government owning all units of housing.
Universal vaccine mandate is about government managing all medical decisions for us.
My kid takes the BAR this summer. If he passes, his company will pay off his law school loans.
The only government guaranteed educational loans should be for STEM degrees, and those should be based solely on need and performance. I know this will never happen because it utilizes common sense.
I remember watching a tv program some years ago about the unmanageable student debt faced by some. The biggest problem was loaning big bucks for fields of study that would never allow the borrower to pay off the loans. The perfect example was the dude who had a pretty big loan for his Masters Degree in Puppetry Arts. That’s right, Puppetry Arts.
Wait a minute on the puppetry arts. Some one has to know how to position and move the bidet.
The cost to buy one Democrat vote is around $25 per election. Anything beyond that is not vote buying, but corruption. That is how all Democrat politicians get rich. Rat vote buying cannot explain the huge amounts of borrowed money now being moved around, with a little disappearing each movement.
Obama moved in on student loan in 2009 and Tge government took them over. Fafsa. Colleges then made tuition soar. Now students cannot pay beck these loans at the rate they’re paying.
As in all things democrats take over, and they take over everything, it fails
People say kids shouldn’t get educated or take out these loans.
It’s not their fault. Obama wanted tte academic community to rip off the kids. Professors and deans are ripping off the kids. Take a look at their salaries. Their numbers. What do they do all day? The Dean of Baylor’s salary was 5mil last time I checked.
This is on anyone who voted Dems in. It’s on parents for allowing this.
The Snowflake Generation: So worthless they refuse to pay their student loans. America has gone to hell.
Agreed. A huge problem is allowing the mental simpletons of HR to have any power. Typically the least intelligent at all corporations.
How stupid we were to scrimp and sacrifice to pay our own way and our kids’ way on time and in full.
I hope everyone who has recently paid off their student loan now sues the government to get “Student Loan Reparations”.
It’s a bailout for the rich.
The median family income in the US is $60k (meaning 1/2 of families make less than that).
• 2/3 of college students come from families making more than $60k.
• 1/2 come from families making more than $100k.
• 1/3 from families making more than $200k.
Deadbeat Nation.
They used to be able to test candidates using aptitude testing. But back in the 60's Griggs vs. Duke Power prohibited such testing on grounds of racial discrimination or disparate impact. So companies had to come up with other ways to screen out unsuitable candidates. They settled on requiring college degrees instead.
I briefly worked for an employment agency in the 70’s.
Amazing what some companies “expected” us to do to send them only”qualified” applicants.
Hint hint wink wink
Unfortunately, that’s how we got into this mess to start with. The Federal gov’t should not be funding any loans. If states want to do that, fine. They can gear it toward the kind of education the state needs, like agriculture.
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