Showing posts with label pause of student loan payments. Show all posts
Showing posts with label pause of student loan payments. Show all posts

Saturday, July 30, 2022

Biden Administration Flirts With Student-Loan Debtors: Throw Me A Moon Pie, Mister!

 Mardis Gras parades are an ancient tradition in New Orleans, going back to the eighteenth century. Social clubs called krewes sponsor these parades, and krewe members throw trinkets called throws at parade-goers. 

Typically, a throw is a necklace of plastic beads, but krew members also throw toys, small stuffed animals, and plastic souvenir cups. 

Every year, Louisianians flock to New Orleans to attend Mardis Gras parades and gather up the trinkets flung from the parade floats. "Throw me something, mister," is the cry of the day as parade-goers compete for the attention of a krew member preparing to toss a good throw.

Most of the stuff thrown out a Mardis Gras parades is crap. Unadorned necklaces of plastic beads are so worthless that no one even bothers to pick them up. Occasionally, however, a krewe member throws something interesting like a football or a Moon Pie, which is a chocolate-dipped marshmallow sandwich. 

College-loan debtors are much like Mardis Gras parade-goers. The Biden administration dangles various student-loan-forgiveness plans before the electorate while student debtors shout, "Throw me something, mister!"  

We already know that some of President Biden's proposals are almost as worthless as a string of plastic Mardis Gras beads. Ten thousand dollars in loan forgiveness will satisfy no one when annual tuition at a private college runs $60,000 per year, and the average student debt is about 37 grand.

Mr. Biden will almost certainly extend the pause on student-loan payments one more time, probably until after the midterm elections. But that is just another string of plastic beads. Not making loan payments for two and a half years is nice, but these loan-payment pauses do nothing to eliminate the mountains of crushing debt. 

When the midterm election season is over in November, I feel sure that 45 million student debtors will feel much like those Mardis Gras parade-goers who plod back to their cars at the end of the day with sacks of worthless beads and a hangover from drinking too much beer.

Nevertheless, everyone should cheer up. Next year there will be more Mardis Gras parades and more proposals for canceling student debt. Who knows? Maybe the Biden administration will throw you a Moon Pie!


Throw me a Moon Pie, mister!





Thursday, June 16, 2022

Why are Progressives Criticizing Biden's Student-Loan Forgiveness Plan?

 President Biden promised college borrowers $10,000 in student-loan forgiveness when he was on the campaign trail. He has yet to deliver on that promise.

Some progressives urge Biden to forgive more student debt. The NAACP said, "$10,000 is not enough, We're calling on our elected officials to cancel federal student loan debt with no means-testing." Senators Elizabeth Warren and Chuck Schumer want Biden to forgive $50,000  per person in student debt.

Surprisingly, some progressives criticize the very idea of blanket student-loan forgiveness.  The Washington Post, perhaps America's most progressive newspaper, published an editorial saying Biden's plan "is yet another taxpayer-funded subsidy for the middle class." The Brookings Institution, a left-of-center think tank, stated bluntly, "One-off, across-the-board forgiveness is capricious and unfair."

USA Today, another progressive newspaper, expressed concern that Biden's student-loan forgiveness plan is complicated by "soaring inflation." And CNN, which is generally supportive of Biden's policy agenda, recently reported that Biden's student-debt cancelation plan "might not be such a great idea."

Why are influential progressive organizations backing away from President Biden's plan to give $10,000 in debt forgiveness to the vast majority of student borrowers?

I think there are two reasons:

First, $10,000 in student-debt forgiveness is a pittance when the average student borrower leaves college with three times that amount of debt, and several million college graduates have debt exceeding $100,000. 

As NAACP President Derrick Johnson put it, canceling $10,000 in student debt would be "like pouring a bucket of ice water on a forest fire. In other words, it won't do anything, especially for the Black community." Johnson called Biden's plan "a slap in the face."

Secondly, I think there is growing concern that the federal student loan program has run amok and that the Department of Education is concealing the true default rate. The feds have already allowed student borrowers to skip their monthly loan payments for two and a half years at great expense to taxpayers. Granting blanket student-debt forgiveness might plunge the program even further into insolvency.

It is disappointing that congressional critics of Biden's debt forgiveness proposal have offered no alternatives other than even more extravagant debt forgiveness.

In my view, our nation won't begin to get the federal student loan program under control until Congress enacts these three reforms:

  • The federal government should bar the venal for-profit college industry from participating in the student-loan program.
  • The Parent Plus program, which has brought so much suffering to minority and low-income families, should be abolished.
  • Distressed student borrowers should have reasonable access to the bankruptcy courts.
If enacted, these reforms won't solve the student-loan crisis overnight, but they will help keep it from worsening. 

But universities must do their part by lowering the cost of going to college. Unfortunately, the universities are doing the opposite-- raising their tuition rates and forcing students to borrow more and more money to get a college education.