Joe Biden unilaterally pulled the trigger yesterday with a Student Debt Relief Plan to fulfill his presidential campaign promise. The current plan will reduce monthly payments, cancel 10k to 20k upfront, and “wipe out” balances for certain borrowers of government-subsidized student loan obligations. Overall, monthly payments are slated to be cut from 10% of discretionary income to only 5%, and they can stop paying the debt after 10 or 20 years no matter what the remaining balance may be. That could eventually cost over a trillion dollars.
There’s no free lunch when it comes to debt via executive order or any other means, and Biden’s bailout will be paid by taxpayers instead of borrowers who contractually signed a dotted line in exchange for education. Private economists have estimated that it could add $300 billion to $1 trillion to the national debt. This latest blow to the country’s debt burden is no surprise to anyone that’s witnessed Biden’s fiscal spending spree since taking over Capitol Hill in January of 2021.
In September of 2018, I published “The Student Loan Debt Implosion vs. Attending College on the Cheap” and followed up on that missive with “Record Student Loan Debt, Delinquencies, and the Clueless Democrat Freebie Mob” in April of 2019. Here is an excerpt from the freebie mob experience:
“The current herd of Socialist-leaning presidential candidates is pandering for votes from an indebted peasantry that signed on the dotted line to repay their student loan obligations. Senator Kamala Harris of California says we need a national priority and commitment to a Debt-Free College Act. Sen. Bernie Sanders of Vermont is waving a giant College for All Act carrot stick. Sen. Kirsten Gillibrand of New York is peddling the Public Service Loan Forgiveness (PSLF) program. Sen. Cory Booker of New Jersey suffers from delusions of Spartacus grandeur and is all over the map with a set of bullet points that read like an ADHD index card. Mayor Pete Buttigieg of Indiana stands for everything from radical debt cancellation to states fully funding college as they do for public education. Former Vice President Joe Biden’s rhetoric about free college is desperately somewhere in the middle, with no definitive plan of action, but it does include an apology. Sen. Elizabeth Warren of Massachusetts chimed in with the most audacious plan that calls for universal free public college and cancellation of student loan debt.” – TraderStef
‘Socialism Wins!’: AOC-Backed NY Dem Celebrates Primary Victory – Aug. 25, 2022
According to FRED data from the St. Louis Federal Reserve, the total value of all student loans owned and securitized was $1.75 trillion as of Aug. 5, 2022.
Six charts on student loan debt in the U.S.… “The number of borrowers who were delinquent or in default dropped during the pandemic payment pause… the amount of student loans each borrower accrues has grown considerably. The average college graduate in 2000 owed $17,350 upon getting their diploma, and that figure grew significantly near the 2008 financial crisis. In 2021, the average graduate owed $31,100. That increase can be attributed in part to a startling rise in college tuition… Last year, 4.3 million Americans owed between $40,000 and $60,000 in federal debt, compared to 4 million in 2019. Fewer and fewer Americans owe $10,000 or less each year.” – Boston Globe, Aug. 24
When one demographic is overtly forced to pay for excessive indulgence by others, it can be difficult to contain rage in the face of sanctimony. To make matters worse, abusers in government positions gaslight you or claim societal victimhood when confronted with questions about feral incompetence in fiscal policy actions.
Biden’s Student Loan ‘Forgiveness’ Is An Unjust, Cynical Abuse Of Power… “Not to mention a moral hazard, counterproductive, and fundamentally immoral. ‘No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’ That’s what it says right there in the Constitution. And yet, without any legislation, Joe Biden now promises to ‘cancel’ up to $10,000 in student loans per borrower ($20,000 for Pell Grant borrowers), limited to those with annual incomes of less than $125,000. Let’s start by pointing out that President Joe Biden isn’t ‘canceling’ or ‘forgiving’ any student loans. Those are preposterous euphemisms favored by Democrats and the media. The debt in question already exists, it has been lent and spent, and those who borrowed the money of their own volition have already received services. This debt isn’t cancelable.” – The Federalist, Aug. 24
Pelosi Admits Biden Doesn’t Have The Authority – Dan Bongino
On the heels of Biden’s announcement yesterday, here’s a vintage video clip of Elizabeth Warren receiving a well-deserved verbal lashing from a parent who “did the right thing.” Also, Peter Doocy hammered Jean-Pierre during the White House presser on who’s paying for the “forgiveness” freebie. Of course, she rarely has a straight answer, and this boondoggle is no exception.
It remains to be seen how efficiently eligible borrowers will be able to file a claim through the infamous D.C. bureaucracy. We can only imagine how the wheels of government will churn given Obama and Biden’s legacy of extreme incompetence in launching the Obamacare Website in 2013. Department of Education (DoE) officials said they will announce details “in the coming weeks.” Biden administration officials noted that borrowers will fill out a “simple” form attesting to their income. The DoE estimates that nearly 8 million borrowers may have their loans discharged automatically because their data is already on file with the DoE. Someone may need to remind Maxine Waters that student loans are no longer managed by Wall Street after the U.S. Government took over that responsibility in 2010 following the Great Financial Crisis.
History of borrowers struggling to navigate red tape… “Student loan servicers are already warning that Biden’s debt relief initiative may be difficult to implement. Sorting through questions like which loan to apply the debt cancellation to, how it will interact with other debt relief programs already on the books and actually operationalizing those decisions will require time-consuming programming on the back end of the student loan payment system, said Scott Buchanan, the executive director of the Student Loan Servicing Alliance… More immediately, because servicers didn’t receive any details of the announcement in advance, Buchanan said he’s also worried that the companies will be hit with a deluge of calls about the plan and have little information to provide.” – MarketWatch, Aug. 24
There’s a concerted effort by the left that compares Biden’s loan “forgiveness” edict with other bailouts like the recent Paycheck Protection Program, as well as claiming that Trump’s tax cut legislation is just like Biden’s goat rodeo. Both claims are preposterous and are debunked eloquently in an article at The Federalist
“So, Biden wipes out working class savings with inflation, empties their wallets with gas prices, drains their resources with mass migration, floods their streets with crime, steals their kids’ education with forced masking, and now forces them to pay off loans for Democrat lawyers.” – Senior Advisor to President Trump Stephen Miller, Aug. 24
Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless… “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse… There are a number of other highly problematic impacts including encouraging higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness, and more… Finally, it’s not obvious to me that this is reasonable for a President to do unilaterally. A number of lawyers (and political leaders) have argued inconsistent with the law. Even if technically legal I don’t like this amount of unilateral Presidential power.” – President Obama’s Chief Economic Advisor, Jason Furman, Aug. 24 Twitter thread
I just want to know where people like myself go to claim a refund on the student loans that I sacrificed and busted my tail to pay off over ten years.
“REPORTER: Is this unfair to people who paid their student loans or chose not to take out loans? BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?” – JM Rieger, Aug.24
Harvard professor emeritus pummeled online for tweet thanking Biden for student loan handout… “While many of Biden’s critics blasted the plan, the renowned retired Harvard professor lauded the controversial move… On Twitter, he thanked the president for the handout on behalf of his students.” – Fox News, Aug. 24
The bottom line is debt is never forgiven, canceled, or wiped out. Biden’s executive action is a socialist transfer of wealth on the shoulders of 2/3 of Americans with existing financial obligations and no college degree in order to pay for the 1/3’s privileged education with a crass political payoff two months before mid-term elections. When you play by the rules, go to work or build a business, raise children, pay your bills, pay your taxes, or go into the military to pay for an education, this administration is labeling you a sucker. Hardworking people that strive to do the right thing are done with being irrelevant and fiscally abused by corporate and globalist politicos. When we normalize not taking responsibility for individual debt and responsibility in this country, we’re careening towards the end of a road that’s not free or prosperous for any of us.
Student Loan Forgiveness Is an Inflation Expansion Act… “Wasn’t it only last week that Democrats were touting something called the Inflation Reduction Act? So much for that… This is an inflation expansion act… We hope Mr. Biden thinks better of this at the last moment. But if he does forgive student debt, it will expose the hollowness of the Democrats’ anti-inflation posturing. The party these days is about spending ever more money without restraint (except for defense). Inflation? Party on, mates.” – WSJ, Aug. 25
“Abuse Of Power“: WaPo And WSJ Slam Biden Student Loan Handout… “‘This is easily the worst domestic decision of his Presidency and makes chumps of Congress and every American who repaid loans or didn’t go to college,’ writes the Journal editorial board… The Post, meanwhile, said that Biden ‘Has generally embraced sensible reforms over flashy gimmicks. But his Wednesday student loan announcement did just the opposite,’ adding that the plan to forgive both the $10K and $20K levels are ‘ill-conceived and misdirected.’” – ZH, Aug. 26
Prepare accordingly, and cast your vote in November.
Bongino: Ultimate Rant on Get a Job and Pay Your Student Loan
Plan Your Trade, Trade Your Plan