Jerri-Lynn here. Despite polling showing student loan cancellation to be popular, even among those who don’t hold such debt themselves, Biden is unlikely to cancel all student debt outright. At best, we’ll continue to see the extension of measures that kick the can down the road, such as a continued pause on student loan payments.
By Jessica Corbett. Originally published at Common Dreams
After a White House official confirmed this week that President Joe Biden is considering further extending a pandemic-related pause on student loan payments, lawmakers and activists renewed calls for debt cancellation.
“We have reached a student debt crisis of epic proportions.”
While payments are due to resume on May 1, White House Chief of Staff Ronald Klain suggested on a popular podcast that the president may extend the pause and is still sorting out whether he will take further action on the student debt crisis.
“This is a GOOD idea!” the group Bold Progressives tweeted with a video of Klain on “Pod Save America.”
We are excited to hear WH Chief of Staff Ronald Klain say that @POTUS is considering a further EXTENSION on student loan payments and that student loan forgiveness is very much still on the table!
This is a GOOD idea!#CancelStudentDebt@WHCOS @DebtCrisisOrg @StrikeDebt https://t.co/SGXuvjnti0
— BoldProgressives.org (@BoldProgressive) March 5, 2022
Senate Majority Leader Chuck Schumer (D-N.Y.), a key advocate of student debt cancellation in Congress, agreed, also tweeting Klain’s comments.
Today would be a great day for President Biden and Vice President Harris to #CancelStudentDebt. https://t.co/MefjfYbK46
— Chuck Schumer (@SenSchumer) March 4, 2022
In response to HuffPost‘s reporting on Klain’s remarks, Congresswoman Marie Newman (D-Ill.) said Saturday that “pausing student loan payments during Covid has allowed Americans to get by.”
“We need immediate student debt relief, and deferring payments again is a great step, but we need to do more,” she added.
Noting that “education is a pathway to greater opportunity and economic security, yet many Americans simply can’t afford it or become crushed by student loans,” Rep. Ilhan Omar (D-Minn.) told Biden on Saturday that “we must cancel student debt.”
Rep. Jesús “Chuy” García (D-Ill.) and Rep. Ayanna Pressley (D-Mass.) also pressured the president to take action on the issue Saturday:
Americans currently hold enough student debt to buy the @ChicagoBulls valued at $3,650,000,000 517 times over.
We have reached a student debt crisis of epic proportions, and it’s time for @POTUS to help a generation of Americans by taking decisive action to #CancelStudentDebt. https://t.co/sZaA38lwp9
— Congressman Chuy García (@RepChuyGarcia) March 5, 2022
.@POTUS must #CancelStudentDebt before it’s too late.https://t.co/PCjsaDIQrm
— Congresswoman Ayanna Pressley (@RepPressley) March 5, 2022
Pressley and Sen. Elizabeth Warren (D-Mass.), who have been leading the fight in Congress with Schumer, participated in a Friday roundtable about how student loan debt impacts Black communities, particularly business owners, entrepreneurs, and other professionals.
Advocates of debt cancellation often argue that it is necessary to help address the racial wealth gap in the United States.
What a day! Our President Nicole Obi & our amazing policy team held a roundtable w/ @RepPressley, @Senwarren, & @Ruthzee to discuss the student loan debt for Black biz owners, entrepreneurs, & professionals a like. We need to #CancelStudentDebt to close the racial wealth gap. pic.twitter.com/Yj04AHiHuo
— Black Economic Council of Massachusetts (@BECMAinc) March 5, 2022
Also on Friday, the Debt Collective announced a nationally coordinated refusal to make payments if Biden refuses to step in before they resume in May.
“If President Biden resumes illegitimate student debt payments in May, we will facilitate as many student debtors as possible to safely pay $0 a month to the Department of Education,” declared Debt Collective co-founder Astra Taylor.
“Whether it’s filing a borrower defense or enrolling in an income-driven repayment plan, we are politicizing our refusal to pay as part of our escalation on President Biden,” Taylor said. “He has the authority to cancel all federal student debt with the flick of a pen. He can end this manufactured crisis today.”
NEW: If Biden turns student debt payments back on, we’re going on a student debt strike.
Join here: https://t.co/jdxgQcd8Ch
“The Debt Collective is Launching a Student-debt Strike If Payments Resume on May 1.”https://t.co/dE6OQe3cV3
— The Debt Collective (@StrikeDebt) March 4, 2022
Debt Collective spokesperson Braxton Brewington emphasized that “we want to be clear—a student debt strike is not intentionally defaulting on your loans, but politicizing and collectivizing your refusal to pay by using the tools the Department of Education already provides to student borrowers.”
“The federal government doesn’t need our student debt payments to function, and the last two years have proved that,” Brewington added, “but they do need our cooperation—and they certainly won’t have that.”
Congresswoman Rashida Tlaib (D-Mich.) expressed support for the planned strike, noting that “the road to student debt cancellation is long and hard, and a key aspect is building solidarity amongst students and graduates with debt.”
“The Debt Collective’s Student Debt Strike is an important campaign to help build the mass movement we need to resist and abolish student debt, and there are so many ways to support it without putting yourself in financial jeopardy,” she said. “I stand with Student Debt Strikers and encourage everyone—whether you have debt or not—to join us.”
As Common Dreams reported last month, polling shows student debt cancellation is popular with the American public, even among people who don’t have higher education loans to repay.
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And instantly get those with private student loans hoppin mad when they find out Discover, Chase, Citbank, etc. ain’t bound by it.
Highly popular and could materially improve people’s lives? The dems are all over it! Just as soon as they can means test it within an inch of their life.
Temporal means testing:
Collections resume the day after the midterms.
Here’s the thing. This doesn’t solve the core issue, the cost of a four year education.
That is the problem that needs to be fixed. But like everything else, we focus downstream and fail to fix the real issue.
Right, but the solution to that is free college. Problem solved. Then again, the crushing debt load is a functional tax with no corresponding domestic spending. That is a crisis in of itself. Are you offering solutions to the crisis you fret about? No, you aren’t. How shocking, but you are the using one complaint to demand inaction.
I’m sure you think this help Democrats, but this is the kind of thing that puts Republicans into office. The DNC talking points are played out. You even reply to each other in the same pattern.
> Here’s the thing. This doesn’t solve the core issue, the cost of a four year education.
Mass availability of debt is part of what causes the price inflation, though. And student loan debt is guaranteed profit, because it’s nearly impossible to shake off.
While I am opposed to student loans in general, the best one can hope for in the near future is allowing it to be a part of bankruptcy.
If you are picturing a ‘jubilee’, explain what happens to current college students. Incoming freshman?
Without a run-up for planning how to fix the finances going forward, it would knee-cap the universities and/or lead to riots amongst the uncovered.
Again I’m not in favor of the inflated tuitions. I’m just trying to be realistic.
Lina’s comment hadn’t loaded yet, but addressed the same thing more succinctly.
The DNC talent pool is getting weak. We aren’t supposed to know you are working together when you pop up and agree with the other commenter.
I don’t understand why you are so hostile to someone’s view point. I thought we liked naked capitalism because it wasn’t propoganda like the msm. There is a legitimate argument that correcting the bankruptcy law is the best solution.
I don’t see anyway to view these comments as anything other than an attack.
I’m sorry, but the DNC use to not give the game away so obviously. I’m sure you are as professional as any DNC lackey since Terry McAuliffe helped lead the party from one disaster to another.
What on earth makes you accuse people of being DNC lackeys? I’m writing it off to you having a bad morning, but I can’t stand either patty and waste my votes on third party and independents. Did you vote for Biden to get rid of Trump? I voted green party for the third straight time, and would be fine with free college, but like Lina was addressing the weakness of the article. You seemed ad hominem in your response, which again isn’t what I had expected nor deserved
Two of the names with concerns are having bad mornings…gosh. Do try harder.
NTG’s tone was too aggressive and jumped to a conclusion, but you and Lina together did not look like a coincidence. I would have been suspicious too but would not have gone out guns a blazing.
It is extremely unusual to have two people show up so early on a Sunday morning, sing from the same hymnal, and even explicitly tag team each other. The only time I have seen anything like this was when we’d get comments in the wee AM just after I’d put up posts on Scott Walker v. the unions, supporting the union, and a couple of union-basher comments would come in almost immediately.
Lol I can absolutely promise I have no idea who Ben Joseph is!
I was making an honest, personal insight on this situation.
I’m a psychiatrist from Louisville. Nice to meet you virtually
Lol and I live in MA and am mom to a spectacular 8 year daughter who I hope never goes into student debt. Pleasure!
I happened to have a rounding weekend so was up for work. Took everything I had to limit my response as this was first time I’ve been insulted since losing my dad to Covid last month. I deserve an apology from might actually be Tim. I’m cursing in my head and don’t feel welcome at one of my daily websites.
And I know NTG has long history of comments and probably won’t be censured, but I think strangers deserve considerate treatment and thought that was NC rule
So ‘try harder’ yourself Not TG.
This is taking considerable restraint on my part. Hope everyone has a better day than mine
I’m sorry to hear about your Dad, that’s terrible. My sincere condolences on your great loss.
“If you are picturing a ‘jubilee’, explain what happens to current college students. Incoming freshman?”
Aye. That’s the key question.
My niece is one of those incoming freshmen. She starts college in the fall. Will her student loans be forgiven? If so, when? Will it happen immediately after graduation, or will she have to slave away on debt payments for 20 years until the nation’s total student loan debt has risen back up to a society-disrupting $1.7 trillion? What’s the plan going forward?
Unfortunately, as best I can tell, none of the leadership at the White House or on Capital Hill are even considering these questions, much less putting together real proposals. It’s hard for people to plan when they don’t know the rules going forward.
That’s why the companion piece needs to be free education at all public universities.
It’s distraction. The reality of the Biden administration is here. He isn’t getting any legislation through. So stop it. He can cancel debt owned by the federales and stop pursuing these bankruptcy cases.
Since Biden is a capitalist, demand money for the vote. Make it stark. This is something he can do which he wont even nave to ask President Manchin for approval. This DNC duo is deploying the same talking points deployed during the Obama administration, even replying to each other, worried about the people who won’t be helped while providing no alternatives.
“That’s why the companion piece needs to be free education at all public universities.”
How would that work? Would the feds simply pay the full tuition, fees, room, and board for all students that attend? No matter how much the colleges & universities chose to raise tuition year after year after year? That would be an open invitation for abuse, and it wouldn’t fly politically. Republicans would stomp all over it.
I suspect Republicans would be happier with an alternative where the feds provided strictly limited amounts of money (perhaps $15k per year per student), but too many schools would have to lay off personnel to make ends meet, and it wouldn’t fly politically with Democrats. They’d stomp all over it.
What we really need is a plan that permits adequate spending for quality education but prevents wasteful spending on excessive administrator/coach salaries and ostentatious stadiums/arenas. But NotTimothyGeithner is correct. Biden isn’t going to get such legislation through Congress. He’s not even talking about it.
So all we might get is a one-time student debt jubilee. And because of the timing, I’m pretty sure my niece and her peers will get left out.
Proposals usually refer to tuition-free public schools, not a pay for everything everywhere plan. Also, public colleges and universities used to be tuition free, or nearly free. Some states already offer tuition-free community college (some with means testing). The University of Illinois has (means tested) free tuition. It’s not an impossible dream as far as practical ways to establish a program. It’s just, as has been said, a question of political will.
For example, from Bernie Sanders:
“…College for All Act to provide at least $48 billion per year to eliminate tuition and fees at four-year public colleges and universities, tribal colleges, community colleges, trade schools, and apprenticeship programs.”
In addition to funding tuition the Sanders proposal also includes additional funding for grants to cover non-tuition expenses, and capping student loan interest rates.
https://berniesanders.com/issues/free-college-cancel-debt/
https://thecollegepost.com/free-community-college-states/
There are nearly 20 million students attending college in the US these days. If you divide $48 billion by that many students, it works out to less than $2500 per student per year. That’s not remotely enough. And I say that as a person who’s been blisteringly critical of the excessive spending habits of modern universities.
[And as a point of comparison, note that states spend between $9k and $38k per student per year for primary and secondary education, per https://www.publicschoolreview.com/average-spending-student-stats/national-data.]
I agree that free college is feasible. Other countries have done it. But it’s going to cost way more than $48 billion per year, and I would expect colleges and universities to fiercely resist. They’re undoubtedly addicted to today’s student loan gravy train.
Why do health care? People with cancer will get all the savings.
Why increase public transit? People with suvs won’t get savings.
The point isn’t to do one thing but to keep doing things. This is just one thing. Your warning is trite and played out. Please tell the DNC to give you a better script.
You are a fool. Yes they can wave a magic wand and make debt go away. My point, which has nothing to do with your DNC fetish, is that there isn’t a free tuition solution that doesn’t threaten private schools, which includes the Ivies that the powers that be attended. Let me know when you win the revolution you narcissist
If you only knew how many expletive-laced tirades I have deleted. Seriously, this is my real first and middle name, and I’m identifiable by my collective NC posts. Who the hell are you? You could be Kamala for all we know. You can guess what you can do as far as I am concerned.
The activists and politicians promoting this don’t think it’s the solution to all problems. Many of them have proposals and actions to address other forms of debt forgiveness, tuition-free public education, and broader issues of universal benefits. Tuition free community college was originally part of the BBB bill, negotiated away to appease people who didn’t vote for it.
In this case, a single person can do much to alleviate a critical problem. There’s no reason not to do it. If he’s worried about the riots, he should do more to help more people in more ways, so they all do better.
And the would-be rioters should join others who already advocate for the universal benefits that would be most helpful in addressing particular issues that concern them the most.
I read over and over and over ad nauseam about the inevitable “riots” that will supposedly ensue from the annihilation of the educational status quo. When was the last time Americans were capable of large scale rioting? Twitter doesn’t count — it’s not a real place.
When Medicare became law, I don’t remember riots about its inherent unfairness. When SSI was passed, I don’t remember riots about ITS inherent unfairness. At the conclusion of all the wars in recent memory, I don’t recall the troops or their families angrily storming the streets, demanding everyone else send their kids to die for fairness sakes.
New tolls on roads erected, existing tolls raised, property taxes soaring, civil asset forfeiture, the 2008 financial crisis exterminating middle class wealth, the very election of Trump itself, those forced to choose between insulin over food, healthcare that routinely bankrupts large swaths of the population. TPP with its ISDS. Foreign ownership of public goods.
Large camps of homelessness, PE buying up the housing stock, houses unaffordable to anyone not a member of or related to the PMC. Purdue massacring Appalachia. Family formation available only to the wealthy.
Stagnant wages, unaffordable cars which are necessary transport to a job, union busting, trade deals turning the mid west into hulking, rusted enclaves of destitution, hopelessness, and misery.
Access to abortion rapidly disappearing, eminent domain, lawlessness of the largest criminal gang in the US — cops. Hospitals in rural areas being closed. Refusal to prosecute Wall Street crooks. Fauci and his cronies still having legitimacy.
200k+ for a four year degree.
No one ever went broke overestimating the ability and willingness of Americans to riot and accept short term pain for long term gain. In fact, that’s a cornerstone of our economy.
So, IMO, the “riot” supposition is bunk.
Sorry Yves
This is BS.
How about the return of the right to declare bankruptcy? You know as well as I do, Joe Biden has blocked that right for students to declare bankruptcy in various manners since the nineties.
What happens to current students? They have the right to declare bankruptcy if, if is needed. That is reality Ben Joseph.
Your comment is out of line. How DARE you accuse me of holding a position I have not only never advocated, but have repeatedly argued for discharging student debt in BK, well before it was fashionable. Later in time, I called out Elizabeth Warren for never pumping for that, when it was an obvious remedy and she as former preeminent BK prof in the US, could have been a powerful and effective backer.
I only did the equivalent of swatting NTG on the nose with a rolled up newspaper for escalating to aggression and accusing Lina and Ben Joseph of both being DNC trolls. That is ad hominem and Making Shit Up since he had no basis for claiming they were paid operatives. If NTG wasn’t a regular with a long history, I would have come down on him harder for making a personal attack on commentors as opposed to arguing on the merits.
You are more worried about ‘knee-cap the universities’ than knee-cap the students? And this is being “realistic”? So I guess you would also be worried about Pfizer not making a profit if Medicare was allowed to negotiate prices? I worked for about 5 years in public universities whilst collecting a PhD in Technology Management and there are plenty of “Assistant Provosts” and “Academic Directors” these Universities can fire to make ends meet. Don’t waste your kindness on Universities. I found them and the Departments in them to be full of vicious people who to be described as “entitled” would be mild. Last year I tried to enroll in Purdue for a Certificate Course and due to my non-English name I was promptly classified as a ‘foreign’ student even though I have paid taxes in Indiana for the last 15 years and have a Masters from another University in the same state. It took me all of 2 months to get my status changed. They asked me to submit paperwork for the last 10 years, tax returns, pay slips etc. No one cared to return my calls, no one replied to my emails and it took an email to the most esteemed Chief Moron – aka the President of Purdue Mitch Daniels for my case to be heard and the error to be corrected. Even after this I was unable to enroll for my first course and I called almost EVERY faculty member listed in the Electrical Engineering Department to ask for help and NOT A SINGLE idiot responded. By sheer accident one number I dialed was forwarded to a “Director of Undergraduate Academics” or somthing like that and she went out of the way to help me. It transpired that a silent hold was applied by a PMC troll preventing me from enrolling for the class. The cretin who did this is not listed in any address book online and the Professors (tenured) go about in fear of her. So, don’t waste compassion on these people. Most of them are on a gravy train and answer only to their PMC masters and do not deserve to have a job.
Perhaps mass-uncovered-people riots and dozens of knee-capped universities are what is needed to torture a hostile government into taking non-hostile action.
Pardon me while I state the obvious (and others beat me to it as I was typing my response):
Canceling student loan debt is just kicking a bigger can. If we don’t address the outrageous cost of college education then we will be back in the same position as we are now.
We can begin by emphasizing the trades, and stop this societal shaming of blue-collar work. A skilled trade is engaging work that can provide a great living and means of support for one’s family, but we have a long tradition in the US of denigrating those who get their hands dirty.
Another thing that needs to happen is the college/university system needs to have more skin in the game. We have seen the stories of the unscrupulous for-profit education institutions that prey upon the hopes of young people and career changers (mostly poor), but the traditional universities are in some ways equally as bad. The current student loan system has created the aggressive marketing of graduate degrees which most students quite frankly don’t need. There needs to be more oversight in this area, some way to tie student success to university success.
I have no concrete proposals on how to get there, it’s too early and I haven’t had my morning coffee. All I know is, as a high school teacher, I see what we are doing to our students, and I am deeply ashamed.
Biden already dropped Jill’s community college program. It was in BBB. It’s not a case of these discussions not being discussed. They’ve been discussed ad nauseum. This is about political will. The arguments being deployed by Ben Joseph and Lina, even if it hasn’t loaded yet, is arguments out distraction from what can be accomplished Today. I don’t mean a metaphorical today. I mean March 6th, 2022.
This is the kind of argument centrists deploy. If we use our political capital on X, we won’t get Y, so we can’t do either.
The entire USA promotion that “one must get a college degree” to succeed in the USA is misplaced.
After being laid off an engineering job in 2004, I spent some time taking classes at the local community college.
I took classes in machining, auto smog systems, programmable logic controllers and automotive electrical systems.
It was interesting and gave me some useful experience.
One instructor told me that the community college was split into two groups, “college prep” and “vocational ed” and that the vocational part was not valued by the administration.
But he said “but we get the jobs.”
And someone with a college degree in this interconnected/globalized world isn’t a rarity.
Someone pointed out some years ago that China and India have about 300 million English speaking college educated people between them.
That number is likely higher now.
The tradespeople ( plumbers, home repair, appliance repair, electricians, construction) have jobs that can’t be outsourced overseas.
A college educated USA “knowledge” worker might be replaced, or have their wage rate bid down, by someone working over the internet thousands of miles away.
The assumed truth that “one works with one’s head, not one’s hands” needs to disappear from the USA’s discourse.
I think it is even less likely he is going to do it. With all of the eyes and news focused on the Russia-Ukraine conflict, this will provide Biden with all the cover he needs to break another campaign promise, and the media is just going to sit on it.
Since Biden has been blowing off his campaign promises ever since he got elected, why should he stop now? Plus, he is also the architect of the policy that made student loans non-dischargeable even through bankruptcy, so I am sure that neither he nor the donors that funded his campaign would ever allow that to happen.
I would put the odds of Biden canceling student loan debt at about the same likelihood as David Duke becoming an honorary member of the Harlem Globetrotters.
yeah… Promises, promises…
Who makes the money on this debt?
Bidens going to take money from US oligarchs?
No.
I actually have a Sallie Mae backed certificate of deposit. So I guess I’m getting some of that? Even though student loan payments have been paused, I’m still collecting the CD rate… but I should probably look at moving that money from a strictly Financial perspective. Look at this rate chart from Sallie Mae on their different products, the logic of it is quite weird…https://www.salliemae.com/banking/rate-table/
I’m hopeful because Klain is mentioned. Biden might even wondering why his approval sucks. Even guys like Schumer are publicly on board. Now I know Biden is cruel, but he doesn’t want Trump holding a treason trial in 2025 either.
It it too cynical to suggest that Schumer is on board because he knows nothing will be done?
Perhaps Hillary is not alone in maintaining differing “public positions and private positions”.
No. But it shows the political downside argument is false. Schumer is afraid. Despite a safe seat and being able to deliver for NY arguments usually deployed.
Mark Warner won’t even oppose it.
Alas, this is true.
Seems its time for direct action: the Debt Collective’s Student Debt Strike
If not now, when?
A chant not heard @ universities & colleges across the USA…
‘Hey, Hey, JRB, when are you going to see the students free?’
Canceling student debt even if it is means tested is a good first step because we need the student loan sharks to understand that DLC protection from loss cannot be taken for granted. I am carrying $29000 of debt but $23000 of it is a parent plus loan for my daughters and if they means test then I will most probably not be eligible for any forgiveness since my wife and I are in the “sock it to the middle class” slice of the tax table. It hurts but I grudgingly sacrifice. These days I often ask myself ‘what do I get for forking over $6000 every year to the Feds and the State?’. Bupkiss. Fixing funding for higher education is a non-starter because most Department Heads in most Universities are Clintonite Neoliberals? I know I am going to be stoned for this comment but ever since going through 2 volumes of Stephen Kotkin’s biography of Stalin I often dream during my walks of a new Stalin here in the US with a corner office in the White House from whence he could initiate a new Red Terror against the DLC and all its organs and then moving to the HODs of Economics Departments. We will of course need him to be preceded with an American Lenin who writes a “What must be done” list that can be used as a good recipe.
Well stone me too, then. I’m liking it!
The greatest bar to new family formation is student loan debt.
New families = new home buyers.
The National Association of Realtors should be all over this like flies on shit.
Yeah right,Biden is going to cancel student debt. Gas lighting. It will be cold day in you know where before Joe Biden does anything like letting these people off the hook. They need to get some votes in the mid terms and are hoping to sucker some people in to voting for the liars. The elites are quite comfortable the way things are now.
what is commonly neglected in the argument is the future—free higher education.
cancelling the past debts and continuing to expect future generations to pay individually for their right to become employable is an insane path for a civilization to take.
granted, this may just increase the pressure on credentialization. one should understand that the credential is being used as a class weapon to restrict hiring.
surprised that the full argument is not coming to the fore. every time the argument is placed only on current debtors, it raises the spectre of “how will this benefit me/my kids when it is our time?”
a permanent right to free education should always be one of the moral imperatives behind such a discussion. otherwise it looks like just temporarily “letting poor decision makers off the hook”.
How to handle it going forward? Set a cap on tuition. No means test, just cap it at something reasonable like a grand a year for undergrad, two for a masters, three for professional degrees. No public funds to any private school that refuses the cap. Keep giving lots of grants to poor kids. I’d eat my hat (the one with the logo of my fancy east coast law school) if it ever happened.
Could someone succinctly help me (and I suspect others) understand the student loan mess ?
For starters
1) why is there such great reluctance esp on the part of the departed Betsey Vos to clean up this mess?
2) Why was the forgiveness program for public service folks so contentious ?
3) If some of the for-profit diploma mills were fraudulent has anyone gone to jail ?
4) Who profited from the student loans ?
Biden is probably getting pressure both from creditors and universities to nix this idea. Creditors don’t like it because they want to collect more interest from outstanding student loans. But universities also have reason to not be thrilled with the idea of canceling student debt. If student debt needs to be forgiven then this will acknowledge that university fees have become unreasonably high, and too frequently create an unmanageable burden which cannot be repaid. These university fees have mostly ballooned because they are financed by federally guaranteed student loans, which make no evaluation of a students ability to repay, and as a consequence can lead to a university mispricing the cost of its services.
Forgiving some portion of past student debt is a good start to helping currently indebted students. But if nothing is done to manage university fees, then future student debt will just end up with the same problems. So canceling student debt is not just a question of past debts, but also managing the future cost of a university education. And that is a very difficult conversation to have.
Also if the U.S. government needs to spend hundreds of billions or trillions to fix this problem, then there should probably be a formal congressional inquiry to figure out what part universities and lenders played in creating this problem. Paying inflated prices to these parties is what created $1.6 trillion in student debt. And what should follow are some Dodd Frank type regulations to prevent student debt problems in the future.
If we are going to have the part of universities and lenders played in the student loan crisis formally investigated, we should also have the part that the Great Tax Revolt and the State Legislative Boycott against supporting State Universities and Colleges also played. And that inquiry should explore which process started happening first. The university price rises? Or the Great Tax Revolt anti-university budget boycotts?
Correct me if I’m wrong but how are you gonna means test broke a$$ students? The loans came from filling out the FAFSA form which is based on the parent’s financial health, never mind that the students are over 18. Many of us have a single asset – our house – that we couldn’t afford to pay for if we had to buy it today. But, hey, you could sell it and pay off your kids’ debts.
Then there’s unwinding the derivatives around the loans. And the backlash from folks who paid off their loans.
But, no matter. Bankruptcy, yes, at the very least and under generous terms. Or dissolve the loans, all of them, no means testing.
What a frickin’ mess. Back when the damage was *only* $1.4T Bard College released this study, which claimed a net-positive for the economy by eliminating the debt: https://www.levyinstitute.org/publications/the-macroeconomic-effects-of-student-debt-cancellation
Best…H
I keep hearing about student debt being the new securitized bond like housing was in 2008 and Wall Street would lose a lot of money if we cancelled student debt. Anyone know more about that who could explain it to us non finance types?
I would like to see student loans cancelled. I would like to see public colleges and universities be tuition free. I think those two things could help rein in the problem.
My own student debt payment is fairly manageable. Or it was before inflation made my grocery and gas budget double. I think the shock of paying student loans again might hurt a lot of us with all of the inflation that is happening.
This discussion is about loans that have been shifted to the federales or originated as federal loans which are currently not being paid. The middlemen have long left the process. Private loan borrowers weren’t included in the stoppage. Theyve been required to make payments all this time per the usual loan requirements. The people who are so concerned about feelings of current students or people who have paid off loans have missed the group paying all this time because they never cared.
This should show you how scummy it is. The private lenders won’t get involved outside of transaction because the expect defaults at such a rate the won’t lend.
Good question…I also wonder if the debt can be rehypothecated or is it just like a high yield treasury?
It’s not just the loans. Thery have securitized the student debt and written derivatives on the collateral loans. It’s been financialized. It will never be forgiven.
https://www.natlawreview.com/article/rmbs-to-slabs-history-repeating-itself#:~:text=Private%20student%20loans%20can%20be%20packaged%20together%20to,a%20substantial%20factor%20in%20the%202008%20financial%20crisis.
Thanks for the article. What’s the process of getting it to not be financialized? Would getting rid of interest help?
Would it be easier to outlaw interest? Or outlaw the selling of loans after they were originated?
Which could be more do-able?
This evil thought just occurred to me: instead of single payer healthcare, the government could subsidize and guarantee heathcare loans. Can’t afford your medication? Take out a healthcare loan. Get diagnosed with cancer and you’ve exhausted your savings? Take out a healthcare loan. Having a baby and even though you have insurance you can’t afford the $4,300 average out-of-pocket costs (back in 2015)? Take out a healthcare loan. Politicians’ favorite donors from the banking and healthcare sectors would love it!
Too late. They already exist. “….as low as 2.4%.” But some rates are as high as 35.99%
https://www.loansmarket.com/medical-loans/?t202id=61059&gclid=CjwKCAiA1JGRBhBSEiwAxXblwR_wzXB0JoltOvFU47hlhFxn2KAEi_5MNX1ckoSW6cKFZ-wASrBG9RoCMeMQAvD_BwE
FWIW, one of the biggest advocates for Cancelling Student Debt (who is working with Schumer) argues in this interview pursuing a “parking lot” metaphor and strategy for debt cancellation. So far, her prediction has held up. And I’d argue that with another inevitable COVID surge disrupting the lives of laborers, along with a mid-year run up in commodities from the Ukraine/Russia knock on effects – the Dems might be hoist by their own petard in a way that forces their hand on this issue in time for mid-terms. (Lots of contingencies, and wishful predictive thinking here on my part, I know!).
Even if this happens, and it’s a big if, there’s still the companion work of making college free. But it’s a damn good start. I have way too many peers drowning in student loan debt for the crime of getting an education.
Great listen to Melissa’s part 2 interview (unlocked/free) here.
Cancelling existing predatory student loan debt merely enables the bloated higher Ed complex to sucker in more “canon” fodder (misspelling intended for sarcasm). Too many administrators, pricy construction for an arms race of amentities, the misplaced focus on athletics, insane textbook (now ebook) prices, instruction quality going too sh!t
It would present an opportunity for a movement to agitate for finding out what the Adminstration/ non-Administration costs-ratio was for various colleges and universities before the rise of the Modern Adminisphere.
If that information could be found and understood, it could be used to force the following grand crash-cramdown upon the University Industrial Complex. Federal student aid would go to students attending universities and colleges which mass-fired and mass-riffed ( reduction in force) their Administrations back to the percent existing at those universities and colleges in the 1960s. Any student going to a college or university maintaining the current high-price/high-cost level of Administration would get zero federal aid.
How long before people who fail to pay their student loans get excluded from the banking system?
If that happens, those tens of millions of people would be a powerful constituency for keeping cash legal.
Those who can might also learn and do more subsistence production for personal subsistence use, and barter of various kinds at various levels.
It would drive tens of millions of people to try co-building survival lifeboats of Free UnMarket CounterEconomy survival activity.
” Pressley and Sen. Elizabeth Warren (D-Mass.), who have been leading the fight in Congress with Schumer, participated in a Friday roundtable about how student loan debt impacts Black communities, particularly business owners, entrepreneurs, and other professionals.
Advocates of debt cancellation often argue that it is necessary to help address the racial wealth gap in the United States. ”
hmmmm . . . .
I will support student debt cancellation for Black people if the Black people support student debt cancellation for White people. Cancel for all or cancel for none. This would be a good opportunity for the seekers of general material benefits to put the case for purely cynical coalitions of convenience between groups who don’t have to like eachother in order to help eachother.
Either one back scratches the other or no back gets scratched.
Everyone should pay their own way.
What’s wrong with that idea?
You can’t actually see it with neoclassical economics.
The early neoclassical economists removed the rentiers from economics.
The dynamics of the capitalist system have become a bit of a mystery.
Disposable income = wages – (taxes + the cost of living)
What does the equation do?
The equation puts the rentiers back into the picture, who had been removed by the early neoclassical economists.
Employees want more disposable income
Employers want to maximise profit by keeping wages as low as possible
The rentiers gains push up the cost of living.
Governments push up taxes to gain more revenue
I’ve let the CBI (Confederation of British Industry) have a quick peek at the equation.
Disposable income = wages – (taxes + the cost of living)
Two seconds later …..
They realise the UK’s high housing costs push up wages and are actually paid by the UK’s employers reducing profit.
Employees do get their money from wages, so employers are actually paying through wages.
You are not really pushing costs onto individuals; you are pushing costs onto employers who can off-shore to avoid paying these costs.
Someone has worked it out.
I watched the film “Greed” the other day.
What does Sir Richard McCreadie work out?
He can pay workers in Sri Lanka 50p a day.
You can pay people 50p a day in Sri Lanka and they can actually live on that.
A low cost of living allows you to pay very low wages.
Sri Lanka is much better than Leicester for garment manufacturing when you want to maximise profit.