Posted on 05/26/2025 7:13:55 PM PDT by SeekAndFind
Here's an economics lesson that belongs in the textbooks.
Student loan debt soared to more than $1.5 trillion during the Biden presidency, and the response by Washington was to "forgive" hundreds of billions of these unpaid loans by deadbeat borrowers and let the taxpayers pick up the tab. It was never clear why the universities that charge exorbitant tuitions that have reached more than $75,000 a year at many elite schools shouldn't bear the cost of the program -- but that's another story.
Those of us who watched these events unfold predicted that one result of this policy would be that many college graduates would stop paying back their loans. And guess what?
Just like clockwork, this headline from Bloomberg recently told the whole story: "Student Loans Drive US delinquency Rate to Highest Since 2020."
Gee, who -- except a bunch of head-in-the-sand politicians in Washington -- would have ever thought that forgiving as many people from paying their student loans as possible would increase future nonpayments?
Well, the Biden administration, for one. Now that the Department of Education is honestly reporting the data, we find that serious delinquency rates are over 10 times what the Biden Department of Education said they were.
There is an old saying in physics and economics: Every action in the universe has a reaction. How many students in the future will pay back unpaid student loans when the next forgiveness program is right around the corner? So people who did the right thing and paid back their debts now have to pay more for the people who refused to pay back the money they owed.
In Washington, we love to reward vice and punish virtue.
As we said many times last year: Expect student loan defaults to remain sky-high for many years as deadbeat borrowers wait for the next student loan amnesty program.
Fortunately, in the House of Representatives' "big, beautiful" tax bill, there are new caps of $50,000 on student loans for undergraduate students and $100,000 for grad students. This cap should help slow the stampede of higher tuition prices, which have grown two to three times the rate of overall inflation over the last 30 years. The availability of cheap student loans only fueled this stampede of tuition prices. The Wall Street Journal calls this move "The End of the College Free Lunch."
The bad news is that we should anticipate bigger stashes of student loans to pile up at taxpayers' doors in the years to come. The good news is that this scam has reminded us that in life, incentives matter. This episode brought to light the financial foolishness of debt forgiveness programs, and so hopefully we will never do this again.
Except that politicians have very short memories.
Oh no! How they gonna have kids if they have no money?
Answer: nite shift. 7-11. That 2nd job.
The rational solution would be to get the government out of the loan business and go back to banks making the decision.
Let’s go Trump!
BTTT
Some loans were outright forgiven and many of those that weren’t went into default? And the Supreme Court said forgiving those loans was unlawful? I’m trying to understand.
As long as I am paying taxes, I'm taking care of ME and also one or two other people ... that's enough. I'm struggling to take care of myself ... so you can't honestly expect me to support your BS lifestyle, too!
Another lesson in the democrats m.o. forgive student loans and stick it to the public to pay for it par.
I would much prefer that the Big Beautiful Bill - and ANY Student Loan bills in the future! - cap the INTEREST on federal student loans at 1%, and the “fees and expenses” at the exact auditable amount spent approving and processing those loans by the “banking institution”.
That is, 15 minutes at $100.00 per hour per loan per person.
25 cents per second for computing time per month if no person is reading the papers.
The actual cost of mailing and printing bills.
If there is no profit to the banks, there will be no loans thrown at everybody.
BINGO!
I am reminded of the US Disaster Loan we got after the 1976 Tulsa floods. We paid back every cent with interest. We even got audited in 1977 by the IRS.
Others who got the loan found a way to slip their loan debt on the 1976 IRS tax forms as a “loss” and did not have to repay.
So...What’s the bottom line? Will we continue to forgive these loans? I was under the impression that particular stupidity was coming to an end, but maybe I was mistaken.
“Forgive” means poor working people paying off entitled suburban Karens loans for party votes and fealty.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.