Showing posts with label President Trump. Show all posts
Showing posts with label President Trump. Show all posts

Monday, February 10, 2025

Trump Should Allow Distressed Student Debtors File for Bankruptcy, and Proggressive Democrats Should Get Onboard

Progressive Dems protest every move President Trump makes, and then they file lawsuits with judges who were appointed by Obama and Biden. It will take months or even years to resolve this litigation, which is the whole point.

Is there anything Trump and the Democrats can agree on? 

How about this? The Democrats and Republicans can join hands and amend the Bankruptcy Code to allow overburdened student debtors to discharge their college loans in bankruptcy like any other nonsecured student debt.

Under current law, students cannot escape their education loans in bankruptcy unless they prove that the debt creates an "undue hardship" for them. The Department of Education and the federal courts have interpreted "undue hardship" very harshly, making it virtually impossible for most student borrowers to free themselves from crushing college loans.

How can that problem be fixed?

Easy peasy. All Congress needs to do is remove two words from the Bankruptcy Code: undue hardship. It's that simple.

Surely, the aged and bleating bulls in the Democratic Party--Maxine Waters, Nancy Pelosi, Elizabeth Warren, Bernie Sanders, Chuck Schumer, etc--can get behind this reform and get this simple change through Congress.

If not, President Trump can get the same result with a one-page executive order. Henceforth, the order would read, undue hardship is presumed when an insolvent student debtor files for bankruptcy. Thus, the burden of proving no undue hardship will fall on the US Department of Education and its debt collectors.

Of course, the Bankruptcy Code should include some safeguards to prevent scofflaws from getting a lucrative degree and immediately flushing their student loans away in the nearest bankruptcy court. College borrowers should be required to wait five or even seven years after completing their studies before accessing the bankruptcy remedy.

Progressives might argue that this sensible reform would undermine the student loan program as millions and even billions of dollars in student debt get wiped off the books. But hey--no one paid down their student debt for three years during the COVID crisis, and the progressives expressed no worries.

And let's remember that President Biden's revisions to the income-based repayment formula are so generous that most student loans will never be paid back anyway.

I predict that college leaders will oppose bankruptcy reform if it gets introduced. They like the status quo--an unending flow of federal student-aid dollars and no accountability for results.

And progressive Democrats will probably oppose it, too. They will suddenly develop a keen appreciation for financial discipline. They don't want anything good to happen for which Trump would get credit.

That's okay. President Trump can open the bankruptcy courts to financially strapped student debtors with a stroke of his pen. All he needs is a Sharpie.


Image credit: Getty Images











Wednesday, January 22, 2025

What's the Difference Between a Liberal Democrat and an Episcopal Bishop? Bishop Budde Lectures Our President

 A riddle:

Question: How can you tell the difference between a liberal Democrat and an Episcopal bishop?

Answer: An Episcopal bishop wears a funny hat.

On my tortuous road to the Catholic Church, I abided for a time with the Episcopalians. While studying at Harvard, I went through confirmation classes at Boston's Trinity Church. I was attracted by the pageantry of Trinity's religious services and by the Episcopal liturgy. 

In time, however, I became disenchanted. I realized that being an Episcopalian was very little different from being a progressive Democrat. Thus, I left the Episcopalian and became Catholic.

Other Episcopalians have become disaffected with their denomination. One article reported that the venerable denomination fell from a peak membership of 3.4 million in 1959 to 1.58 million in 2020. Indeed, the Episcopal Church is losing members so fast that one commentator predicted its demise by 2040

However, the Episcopal hierarchy is unbowed, and the elaborately robed bishops continue to lead their flocks toward oblivion. In this spirit of self-destruction, Bishop Mariann Budde delivered a disrespectful lecture (disguised as a sermon) to President Trump at the Washington National Cathedral in Washington, DC. President Trump demanded an apology, which he is unlikely to get.

Bishop Budde made two main political points. First, she expressed fear for gay, lesbian, and transgender Americans, saying: 

I ask you to have mercy upon the people in our country who are scared now . . . There are gay, lesbian, and transgender children in Democratic, Republican and independent families, some who fear for their lives.

Second, the Bishop challenged President Trump's immigration policy. "The vast majority of immigrants are not criminals," the Bishop exhorted and begged the President to show mercy "on those in our communities whose children fear that their parents will be taken away, and that you help those who are fleeing war zones and persecution in their own lands to find compassion and welcome here."

I want to briefly challenge Bishop Budde's political themes. First, I don't believe that American gays, lesbians, and transgender people fear for their lives. Nor do I think President Trump has ever said or done anything that should frighten our nation's LGBTQ communities.

Second, Budde's insinuation that Trump would harass or deport immigrants who entered this country to escape persecution is not entirely accurate. The President is merely requiring immigrants to follow established legal processes and trying to stop the entry of criminals and drug traffickers from entering the United States.

Deportation processes may indeed disrupt some immigrant families, but I believe our government can remove illegal immigrants humanely. We will soon see.

Speaking as a Catholic and ex-Episcopalian, I suggest Bishop Budde pursue her political agenda as a layperson. Perhaps she should become an employee of the Democratic Party. I'm sure the Democrats would be happy to hire her and allow her to continue wearing her funny hat.








Saturday, March 21, 2020

The coronavirus pandemic and broad relief for battered student-loan debtors: Congress needs to go big or go home!

The coronavirus pandemic rolls along like a tropical storm gathering force in the Gulf of Mexico.
Every day, it kills more Americans and further batters the national economy. The airline industry, the travel industry, and the restaurant business are begging for financial assistance to help them survive an economic crisis that no one saw coming.

PresidentTrump and Congress are working on a $2 trillion aid package to assist industries that have been hit hardest by the COVID-19 outbreak and provide cash assistance to individuals who lost their jobs or their businesses due to the pandemic.

Lawmakers also recognize that student-loan debtors need relief. Even before the pandemic, millions of college-loan borrowers were struggling to pay off their loans. Now--as the unemployment rate rises and whole industries collapse, a lot of student-loan debtors have their backs to the wall.

Republicans and Democrats have both proposed some form of assistance for student debtors. The Republicans recommend giving students a three-month break from their student-loan payments with no interest accruing.  The Democrats want the Department of Education to make student-loan payments on borrowers' behalf for as long as the national emergency lasts.

These proposals are a good start, but they do not go far enough. More than 45 million people have outstanding student loans, and less than half of them can pay them back. As President Trump might say, it's time to "go big" when we think about student-loan relief.

First of all, let's take a look at Senator Bernie Sander's proposal for total student-loan forgiveness—a $1.6 trillion-dollar bailout. Let's also examine Senator Elizabeth Warren's plan for loan forgiveness up to $50,000 per debtor. These ideas are not as wacky as some commentators have made them sound.

Regarding Bernie's idea, let's face facts. More than 8 million people are in long-term, income-based repayment plans, and most of these people are not paying down the interest on their loans. In fact, their loan balances grow with each passing month due to accruing interest. Millions more are in default or have their student loans in deferment. They're not paying their loans back either.

What's the point of pretending the student-loan scheme is a solvent federal program? It's not.  Bernie's plan to wipe out all student debt and offer a free college education is a logical proposal.

Senator Warren's plan to help student debtors also makes sense.  She wants to cap debt relief at $50,000, and that would help a great many people. After all, as  Don Trooper and colleagues recently reported in The Chronicle of Higher Education, people with small loan balances are more likely to default on their loans than people who owe $100,000 or more.

Forgiving student debt for individuals who ow relatively small amounts would help a lot of debtors who took out student loans to attend for-profit colleges and trade schools and didn't benefit from their educational experience.  That would be a good thing.

But if we really want to "go big," Congress must do two straightforward things. First, it must strike the"undue hardship." language from the Bankruptcy Code and allow insolvent student-loan borrowers to discharge their college loans in bankruptcy like any other nonsecured consumer debt. Second, it must repeal those provisions of the 2005 Bankruptcy Reform Act that made it more complicated and more expensive for beaten-down debtors to file for bankruptcy.

The very purpose of bankruptcy in American law is to give honest but unfortunate debtors a fresh start. Lawmakers need to remember that now as we enter into this century's Great Depression.

The 2020 Depression will look a lot like the Depression of the 1930s.









Saturday, March 14, 2020

President Trump waives interest on student loans "until further notice": Woefully inadequate relief for distressed student-loan borrowers

In yesterday's speech on the coronavirus crisis, President Trump announced he is temporarily waiving interest on all federal student loans.

"I've waived interest on all student loans held by federal government agencies ... until further notice," Trump said in his speech "That's a big thing for a lot of students that are left in the middle right now. Many of those schools have been closed."

I appreciate President Trump's effort to assist distressed student borrowers, but yesterday's action is totally inadequate.  Millions of distressed student borrowers need broad and immediate relief, and a temporary waiver of interest offers almost no help at all. 

Around 45 million Americans have outstanding student loans totaling $1.6 trillion.  For many college-loan debtors, interest has already accrued, causing their loan balances to double, triple, and even quadruple.  Temporarily waiving interest on that debt is almost meaningless.

Besides, I think President Trump may have overestimated the Department of Education's ability to implement his moratorium.  Adjusting interest costs for 45 million student borrowers is no small task. Many student debtors have more than one student loan, and these loans have varying interest rates. (In fact, I met a woman yesterday who has five separate student loans.)We're probably talking about interest adjustments on more than 100 million individual loan agreements.

Frankly, I don't think Betsy DeVos's DOE is up to the job. DOE completely botched the Public Service Loan Forgiveness Program, denying 99 percent of the applications for PSLF debt relief. Last year, a federal judge ruled that DOE had managed the program arbitrarily and capriciously and in violation of the Administrative Procedure Act.

Also last year, a California federal judge held Secretary DeVos and DOE in contempt for not abiding by the judge's order to stop trying to collect on student loans taken out by people who had attended schools operated by the now-defunct Corinthian Colleges. I don't think DeVos and her crew intentionally disregarded the judge's order. I think they simply don't know what they are doing.

If DOE cannot manage its routine responsibilities, how can it manage adjustments on student loans held by 45 million people?

As Steve Rhode wrote a few days ago, "People in denial about the impact of COVID-19 may be adequately protected with emergency savings, good health insurance, and paid time off of work. But those of us who work in hourly paid jobs are at a very high risk of having finances slaughtered by this virus."

Mr. Rhode's observation is particularly applicable to college students and former college students.  A lot of people with substantial student-loan burdens are working in temporary jobs that pay low wages. In the coming weeks, these jobs are going to be lost as the public stops eating out, shopping, and traveling. The people who held these lost jobs are going to be unable to service their student loans, and many of them will default.

Giving overburdened student debtors a temporary break from the interest on their loans is like putting a bandaid on a compound fracture (a hackneyed analogy, I admit).  President Trump and Congress need to take far more drastic action.

Specifically, Congress must revise the Bankruptcy Code to allow insolvent student-loan debtors to discharge their student loans in bankruptcy.  

Ultimately, our politicians will be forced to confront the fact that the student-loan program is a colossal disaster, and the coronavirus epidemic is going to make it worse. Now is a good time to do what needs to be done. And what needs to be done is bankruptcy reform.