One of the current “Fairness Flames” being stoked by leftists and their pop media packagers is the audacious attempt to simultaneously portray massive college loan debt forgiveness as being “fair” to “the young people who are OUR future,” while saddling you and the next generation with the payments.
And their drum-beating is growing louder, as a new report from the Washington Post tells us that “Biden Signals He’s Open to Canceling Student Loans.”
But, as many in pop media wring their hands and weep about “fairness” for these poor, sad, former students who willingly ASKED FOR their federally-induced loans (loans the feds want to make your responsibility), and while politicians like Senator Liz Warren (D-MA) claim that it’s a “gender justice issue”, they avoid a lot of facts, not the least of which are the facts that previous US “Administrations” already have shifted billions of this $1.7 TRILLION liability onto you and your kids, the fact that this has contributed to the inflation of the money supply (which will continue when Biden and his pals make their move to “cancel” more student debt), and the fact that the past eighty years of federal enticements have created this insane college debt and price increase situation, in the first place.
Few mainstream media outlets will bother to tell Americans that Barack Obama already “forgave” (i.e. shifted onto others) debt for many college and post-college grads who took student loans.
Student debt is a racial justice issue.— Elizabeth Warren (@SenWarren) February 24, 2022
After 20 years of payments, the typical Black borrower owes 95% of their initial student loan, yet the typical white borrower owes 6%.@POTUS can help close the racial wealth gap by canceling student debt.
In 2011, Obama established the “Pay As you Earn” scheme, a change in the way the unconstitutional Department of Education would handle repayment of federal college loans. This saw the feds cap yearly repayments of ten-year college loans for single people at ten percent of the debtor’s annual gross income. But that wasn’t enough for Barack, so in 2014, he announced an expansion that actually saw a cut-off point beyond which loan recipients would no longer have to pay a dime.
Teachers can have their balance canceled after ten years, for example. Low-income borrowers can have their balance canceled after 20 or 25 years of on-time payments.
More recently, as Zack Friedman wrote April 23, for Forbes, thanks to “temporary, emergency moves” that, of course, politicians like Trump and Biden have made far from “temporary,” since the start of the 2020 federal COVID-19 “bailout” insanity, the feds have, essentially, canceled another $200 BILLION in federal student loans.
Student loan borrowers have received approximately $200 billion of student loan relief over the past two years due to the Covid-19 pandemic.
Actually, that’s not due to the “pandemic,” it’s due to political machinations and pandering, but, let’s continue…
In March 2020, Congress passed the Cares Act, a $2 trillion stimulus package that included historic student loan relief. Among other benefits, student loan borrowers were no longer required to make federal student loan payments. Student loan interest rates were temporarily set to 0% with no new interest accrual. President Donald Trump extended this student loan relief twice, and then Biden approved four more extensions. In aggregate, 37 million student loan borrowers haven’t been required to make a federal student loan payment since March 2020. This includes the entire duration of Biden’s presidency.
And, get this:
In addition to no required federal student loan payments, student loan borrowers can count any non-payments toward the requirements to get student loan forgiveness. For example, this includes student loan forgiveness through income-driven repayment and public service loan forgiveness. This student loan relief expires on August 31, 2022. For a borrower who is pursuing public service loan forgiveness — which requires 120 monthly student loan payments — that borrower will have received nearly 30 months, or 25%, credit toward the requirements to get student loan forgiveness.
When was the last time you took out a loan and got a 25 percent write-off? And, this isn’t really a “write-off” – it’s “write it onto someone else, namely the rest of the taxpaying populace, for generations to come.”
And since this debt is owed to banks, the Administration will incur the debt first, then, to pay those banks, the DC gang will combine tax increases with federal bond issuance (i.e. the US government’s own debt-financing). THAT will inspire the Federal Reserve to buy vast swathes of those bonds after the Fed creates more currency, and… you got it, the “college debt forgiveness” – actually an adoption of more debt by the central government (and you) -- will inflate the money supply even more.
Not a bit of it is constitutional, let alone ethical, which is the deeper point.
Student loans did not exist in their present form until the federal government passed the Higher Education Act of 1965, which had taxpayers guaranteeing loans made by private lenders to students. While the program might have had good intentions, it has had unforeseen harmful consequences.
Indeed, as Kowalski correctly points out what those familiar with economics, government subsidies, and moral hazard know, this concentrated the benefits onto the loan recipients and spread the costs onto unwitting taxpayers.
This fueled demand for the higher education business, where existing universities and colleges expanded their academic programs in the arts and humanities to suit students not interested in math and sciences, and it also led to many private universities popping up to meet the demands of students who either could not afford the tuition or could not meet the admission criteria of the existing colleges. In 1980, there were 3,231 higher education institutions in the United States. By 2016, that number increased by more than one-third to 4,360.
Shortly after the '65 start of the Higher Education Act, in 1972, Rhode Island Democrat Senator Claiborne Pell pushed through Congress the Nixon-approved “Pell Grant” for “deserving” low-income college attendees – a grant that DOES NOT HAVE TO BE REPAID.
Free-market commentators tried to warn Americans about this. But our warnings have gone unheeded. Thus, while Pell Grants worked their evil magick, the feds kept increasing the yearly and total amounts that students could receive in loans. In the 1980s, the total was $2,500 per year over four years. But that’s jumped to $12,500 annually and $57,500 total, while grad students can borrow up to $20,500 annually and $138,500 total, incorporating their undergraduate loans.
All of which has seen a spike in college charges, or, as Erik Sherman reported in September of 2020:
The average cost of attending a four-year college or university in the United States rose by 497% between the 1985-86 and 2017-18 academic years, more than twice the rate of inflation. The cost of attending a traditional four-year university has been rising more than twice as fast as inflation, and two-year community colleges a third faster.
The history of college loan debt is one of vast moral degradation, profligacy, anti-constitutional pandering, and blame-shifting, all for political purposes.
We won’t hear much about this as Biden prepares to add to the problem, but it’s worth remembering.