One of the policy planks of the Biden campaign was the shiny penny (Bitcoin) lure of a Biden presidency forgiving student loans in their entirety or forgiving $10,000 of the outstanding student loan debt.
Since more than half of all student debt is to persons 24-34, this campaign promise was targeted on the young voter.
In other cultures, this might be called: “Buying Votes,” but not in America where we intend to “Build Back Better.”
Basic facts on student loans, Big Red Car?
Here are some useful facts, dear readers:
1. The US, which is the lender of first resort these days, has $1,600,000,000 in student loans.
2. Some 20% of all such loans were in default as of pre-Pandemic days.
Please note that the Trump admin made some substantial changes to the Federal programs as part of COVID-related legislation. More on that later.
3. This consumer debt — student loans — is second only to mortgage debt. It is a big deal.
4. These loans may be priced as low as 1.89% and vary upward from there.
Terms were intended to be limited to 10 years, but there are many means to extend the repayment period.
5. There are 45,000,000 student loan borrowers, some of whom may have multiple loans.
6. Current average loan balance is $33,000.
7. Median loan balance is $17,000.
8. Average monthly loan payment is $393.
9. Median monthly loan payment is $222.
10. More than half of all student loans are to borrowers 24-34 years old.
Can’t you already get your student loans forgiven, Big Red Car?
Well, yes, dear reader, you can. Here are several such programs:
1. Public Service Loan Forgiveness — after ten years of timely payments, the balance of your loan may be forgiven if you are working in an industry declared to be public service, like government.
2. Loan Forgiveness after 20 years — after twenty years of timely payments, the balance of your loan may be forgiven.
3. Teacher Loan Forgiveness — after five consecutive years of teaching, you may have up to $17,500 of your student loan forgiven.
4. There are a great number of regular military, reservist, combat veteran, and disabled vet programs that forgive large amounts of student loans. These are very generous programs.
This is entirely different than the GI Bill.
5. A doctor entering the military can get up to $120,000 of debt forgiven over a three year period.
COVID modifications, Big Red Car?
The Trump admin made the following changes, all of which are currently in effect, but may be burning off soon:
1. All student loan repayments to the Federal government are suspended.
2. All student loans in default or forbearance negotiations are frozen — given automatic admin forbearance.
3. Interest rates are reduced to 0%.
None of these missed payments will be disqualifying for any program that is based on continuous and timely payments.
OK, Big Red Car, why does Joe Biden want to forgive student loans?
There are many reasons, dear reader, here they are:
1. This was a campaign promise intended to drive the young voter into the arms of Biden-Harris. It was pure vote buying.
2. Hunter Biden still has a few college loans and The Big Guy was looking after Hunter. [JK. This is a joke. You know who this was intended for.]
3. The Biden folks think that forgiving all or part of student loans will be a big shot in the arm for the economy.
Will it work, Big Red Car? The economic stimulus?
No, of course not. Let’s reason together.
1. While forgiving $1,600,000,000 in student debt is a big number, it is a FUTURE payment, not a current payment.
The current economy does not care that you will not make a payment five years from today.
2. The impact of stopping student loan payments is already baked into the cake and has been since the President signed the CARES 2020 Act that stopped current payments.
3. If you cancel the student loans, it is the payments by the borrowers that will disappear — that has already happened. As noted above — baked into the current cake.
There will be substantial pushback on this idea from the following groups:
1. Persons who paid college tuition as they went and have zero student loans.
2. Parents who paid for their kids’ school with real money — real after tax money.
3. Old people who went to college years ago regardless of whether they paid with loans or not.
4. People wo did not go to college.
Why should they embrace the financial burden of those who studied (partied?) while they worked?
5. The 74,000,000 persons who voted for Joe Biden’s opponent in the election — the deplorables, the chumps, the dopes. Those guys.
Bottom line it, Big Red Car
The forgiveness of student debt for a small slice of America is a nonsensical idea and will have zero impact on the economy, but it will buy a lot of votes in the pertinent demographic. So, there is that.
Shall we urge Joe Biden to forgive student loans?