Skip to comments.Here's One Debt ceiling deal detail I lurves: Start forking over those student loan payments
Posted on 05/31/2023 9:12:38 PM PDT by SeekAndFind
In all the sturm und drang about the debt ceiling deal, how this passed under the outrageous outrage radar, I have no idea, but it tickles me to death.
Now, I had only heard the bloviating about how the agreement did nothing to truncate Biden’s student loan give-away and snarl snarl snarl. But, in and of itself, that would seem like a waste of negotiating ground to me as there’s a fair chance SCOTUS will deep-six it in any event. What I think is really nifty is what McCarthy and his fellows got in this package as far as the never-ending payment pause went.
The party’s OVER. The agreement prohibits any further extensions of the “emergency payment pause” after the 30 August cut-off.
The deal reached by President Joe Biden and House Speaker Kevin McCarthy to raise the nation’s debt limit would force the administration to resume collecting federal student loan payments and interest for millions of Americans at the end of the summer.
The agreement, the text of which was unveiled Sunday evening after weeks of negotiations between the White House and GOP leaders, would terminate the ongoing pause on monthly payments and interest after Aug. 30.
I love the so sad language: it would “FORCE the administration to resume collecting” all those years late payments and interest, and piss off boatloads of well-to-do, graduate degreed Democratic voters.
[CUE: sad trombone]
The usual suspects (“student debt activists” *SNORT*) are all in on a we-want-everything-free-until-it’s-free-forever plan. They’ve kind of taken to not having to pay for anything they agreed to pay for.
…Progressives and student debt activists have said that payments should remain paused at least until the Biden administration is able to deliver on the debt cancellation it promised last year.
The Biden administration had extended the pause 5 times – FIVE! – since taking office. Talk about shaky justification – it was costing enormous amounts of lost revenue at a time of low unemployment and a vaporizing “pandemic.” These people couldn’t resume paying again, why?
…The pause on payments, which also set interest rates on student loans at zero percent, has been in effect since the pandemic began in spring 2020, and affects roughly 43 million people with federal student loans. According to the Committee for a Responsible Federal Budget, the pause has cost an estimated $5 billion a month, totaling an estimated $195 billion since it began.
In November, the Education Department announced the latest extension of the student loan payment pause. It was the fifth time the Biden administration extended the pause first put in place under President Donald Trump.
That’s the good news. The bad news may be getting the money. In the first place, over a quarter of these loans were in delinquent territory before the pandemic. And now they’ve had over 3 long years with all that extra money as part of household/spending budgets, and you know it wasn’t going into being prepared for the inevitable.
…Even before the public health crisis, when the U.S. economy was enjoying one of its healthiest periods in history, problems plagued the federal student loan system, with about 25% — or more than 10 million borrowers — in delinquency or default.
Experts say hardship rates are likely to only increase with the setbacks of the pandemic, the current sharp rise in prices on everyday goods and the fact that borrowers have gotten used to a budget sans student loans.
Back in November, I noted part of the Biden argument for forgiving student loans was that they hadn’t paid for them in so long, why would they start up paying again now?
…As I wrote earlier this month, once word of this “forgiveness broke (before the election of course), borrowers were already spending their ill-gotten lucre in their heads. The Biden administration, in their court filings, had the unmitigated nerve to assert that, because the payments had been paused for so long, those amounts had already become part of a regular budget and would cause irredeemable harm if they had to be recouped to pay that student debt. Shoot! They just might not pay another dime at all, they’re going to be so disappointed.
To be sure, that is a not insignificant amount of money now circulating that, if redirected back where it belongs, presents its own risks. Concerns are it could collapse consumer spending, which is the primary driver of the U.S. economy. The forbearance on student debt amounts dwarf any other COVID spending.
…Well, according to Jefferies, the return of monthly loan payments presents risks similar to the effects of the 2013 fiscal cliff, when tax increases led to reduced consumer spending. And in a note released Monday (available to pro subscribers), JPMorgan’s chief US economist Michael Feroli said that the end of the payment moratorium will reduce annual disposable personal income by $38 billion, which will reduce consumer spending.
…As noted above, Education Secretary Miguel Cardona said the student loan deferment program will end no later than June 30, 2023, and payments are expected to resume by Sept. 1, 2023: “The amount of money we are talking about, in excess of a trillion dollars, is staggering. Student loans represent 7% of U.S. GDP” according to FrightWaves.
Putting these numbers in context, 64% of the $1.7 trillion in student loan debt have been in forbearance for the past three years, amounting to $1.1 trillion. Many of the 25 million Americans who have deferred payments for student debt are aged 18-44 years old, one of the most important demographic groups that drive consumer spending.
Some more math: according to a New York Fed study, the average student loan payment is $393 per month.
For consumers taking advantage of the program, they have deferred 39 months worth of payments, resulting in more than $15,327 in additional discretionary income during the period, much larger than the amount most consumers received from other COVID stimulus programs.
It shouldn’t be a “suddenly $400 a month poorer” but it’s going to feel like it after a multi-year long holiday. And, for that all important 18-44 spending demographic, that could really be a hit, both financially and psychologically. They could, conceivably, curl into fetal balls and refuse to spend anything further on “stuff.” Yeah, that pullback would be crippling.
But, hello. They owe the repayment on those debts – I don’t – and I am delighted the shifting due dates game is over and done with.
My sympathy meter is pegged as far as their situation goes.
I’m tired of watching people skate by.
And if Biden doesn't what are you going to do, file a complaint with the DOJ? Sue him in Federal Court. What? The international rules based order is not rule of law you lazy evil Stupid SOBs.
They already gave away their leverage.
As the Feral Gubmint skates by with another $4T for the deep state on top of collected taxes and fees and other income and revenue.
The media will blame the evil republicans for ruining the lives of these poor students and this will backfire on Kevin McCarthy since this won’t turn these students to vote republican, they will be voting against republicans for spite. Great job McRino, you’ve really outdone yourself on this one.
Eff the students...pay up!
I posted on my Facebook page some criticism of Sd house rep dusty johnson and his part in the debt limit deal
Within minutes of my posting my telephone rang and dusty johnson left me a message about the good deal he cut with the bideniods.
Everyone who clicked on my page received a call ...too
Yumm, I’m eating this $hit Sandwich to own the Libs!
One cause of the current inflation.
Don’t forget, folks, that this deal was created by Trump-endorsed RINO, Kevin McCarthy.
The student loan suspension started under TRUMP, not Biden. As the author says, it has been going on for 39 months.....that is back to the Trump years and became more fuel for the inflation fire burning currently.
Add to this, the $2 trillion CARES Act that Trump signed, which gave these people even MORE money and you have the origins of our inflationary spike.
These frauds hold themselves up as principled conservatives when their votes don't matter ... but when they are put in a position to actually put a stop to something that they've been opposing for years, they fold like wet spaghetti.
THIS is why Republican voters supported Trump in the first place. You may as well support a RINO clown when the “real Republicans” are a bunch of feckless losers.
I am very disappointed in Massie for supporting this.
His excuse is that if they voted it down, then McConnell and Schumer would have made a deal in the Senate and that would be even worse.
I don’t buy it.
What a huge pile hprse pcky this article is.
The agencies have been politicized. What makes Beege Welborn think that the agencies will enforce the collection of student loan debt when Homeland Security refusues to enforce immigration law at the Southern Border, and the DOJ refuses to investigate and prosecute Hunter Biden?
Biden and his commie running dogs will just refuse to follow the law requiring the collection of student debt.Whose going to force them? Kevin McCarthy?
We see this all the time....we send someone really good to DC and, for a while, they defend and protect conservative principles only to, eventually, betray us and become part of the swamp.
it was a really big check... /Dean Martin
So did the American citizen taxpayers pay the monthly loan repayment for 3 years or was the whole thing just suspended for that long ???
Suspended. It’s still all there just without interest. The smart ones should have been paying off as much as they could interest free. Hopefully many did.
My attitude is, "let's get the debt to $40 trillion as quickly as possible, because that's when the fun begins." Interest rates aren't coming down, so annual debt service will be in the range of 2 trillion dollars, more than twice the defense budget.
Everyone's ox will have to be gored. I expect Congress will enact something close to Directive 10-289 to respond to the fiscal crisis.
This year's federal budget will be the first one dealing with higher interest rates, that will give us a look at the game plan. There is no way out of it.
Does this make me a hypocrite, because my wife's college debt was written off under a forgiveness plan due to her federal service? I feel like Michael Corleone talking to the Senator at the start of Godfather II.
Then again, she followed the rules as currently propagated, and she was making regular payments.
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