Tag Archives: Student loan forgiveness

The Politics of Control and Economic Oblivion, MN Gordon

Power and control are root causes of economic oblivion. From MN Gordon at economicprism.com:

A recent White House fact sheet declares that President Biden has delivered on promises to cancel $10,000 of student debt for low- to middle-income borrowers.  Who’s he really delivering for?

Without question, the student debt crisis is a disgrace.  There are roughly 45 million student loan borrowers who owe on the order of $1.6 trillion.  Most of this debt is from federal student loans.

Thus, the federal government is responsible for this mess.  It supplied the credit.  In turn, massive amounts of federal student loans inflated a higher education bubble and an industry of entitled, fake intellectuals.

The business model generally requires signing credulous 18-year-olds up for massive amounts of government backed student loans.  These young adults have been told since before they could count that college was the magical path to a bright future.  But as tuition costs ran higher, propelled by more and more student loans, the value proposition no longer penciled out.

To be clear, cancelling student debt rewards a corrupted education industry much more than it rewards overindebted students.  It allows colleges and universities to perpetuate an inflated product.

Rather than cancelling student debt Biden should cut off government sponsored student loans.  Scuttle the gravy train that supplies universities with undeserved wealth.

Now what would happen to all these high paid professors and fancy country club style college campuses without all this government sponsored debt?  For starters, tuition prices would fall.  Professor salaries would also fall.  And college campuses would adjust to their more modest means.

Would the product – the education – be inferior?  Not for the technical disciplines that matter.

Smaller budgets, however, would help trim the fat, and eliminate many of the nonsense quack ‘studies’ courses.  These courses have little redeeming value and only exist because they’re funded by an abundance of federal student loans.

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The Radical Mob Is Rewarded, While Innocent Americans Will Be Crushed by Biden’s Student Loan Stunt, from Revolver

It’s starting to dawn on people just how unfair Biden’s student loan forgiveness is. From Revolver at revolver.news:

Last Wednesday, President Biden made his big announcement about how he plans to handle America’s $1.8 trillion (and growing) student loan bubble.

Biden’s plan grants $10,000 in relief for everyone with outstanding undergraduate student loans making less than $125,000, plus an additional $10,000 in relief for anyone who used a Pell Grant to attend college. The announcement cancels all remaining student loans for about 20 million people, and more than 20 million others will have at least part of their debt removed.

President Biden also extended the pause on student loan repayments, begun by Donald Trump in 2020, for another five months, but insisted this extension will be the last one and that payments will resume come 2023.

What to make of all this?

1. If you’re a responsible member of the middle class, then get f*cked. 

Suppose you followed the playbook of middle-class, so-called “bourgeois” values: careful planning, responsibility, thrift. When it comes to America’s bloated college industrial complex, this creates a lot of options. Some people work a job on the side so they can attend school without taking out loans. Some people choose a cheaper or less distinguished school so they can get a scholarship, potentially hobbling their long-term career prospects for the sake of avoiding debt. Some people do a stint in the military to get G.I. Bill benefits. And of course, millions of parents save for decades to enable themselves to pay for a child’s education without them using loans.

The message of Wednesday’s development is, screw all of those suckers.

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Biden Plans To Cancel $10,000 In Student Debt Per Borrower Ahead Of Midterms, by Tyler Durden

Talk about buying votes. From Tyler Durden at zerohedge.com:

As soon as this weekend, President Biden could announce a plan to cancel $10k in student debt per borrower, according to WaPo, citing three people with knowledge of the matter.

Biden could make the announcement at the University of Delaware’s commencement ceremony on Saturday. The plan would apply to Americans who earned less than $150k in the previous year or less than 300k for married couples filing jointly.

On April 6, the White House announced it would extend the pause of federal student loan repayments through August 31. It wasn’t clear if the administration would extend the moratorium beyond this.

The decision to wipe out $10k of student debt per borrow who meets requirements comes as President Biden’s approval ratings collapse. 

Notice how the number of stories in the news of “student debt loan forgiveness” is soaring ahead of the midterms, but Biden’s polling numbers remain cratered.

“No decisions have been made yet,” Vedant Petal, a White House spokesman, said Thursday.

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The Bailout Binge Begins, by John Rubino

The opening bid is in on student loans, but the bidding will go much higher. From John Rubino at dollarcollapse.com:

This sounds generous but is actually just the opening bid in a negotiation that will end in a very different, much more expensive place – and that will be repeated for many, many other groups of borrowers. Here’s how this first round will go:

The vast community of ex-college students who still owe big bucks on their much-less-valuable-than-expected college degrees will scoff at Biden’s miserly offer. Articles will appear in the corporate press with headlines like “Bob Smith owes $275,000 on his history degree. $10,000 won’t save him. Not even close.”

The new government – correctly recognizing that deeply-indebted college-educated baristas are a core voting bloc – will immediately come back with a bigger number. This too will be roundly rejected as not fixing the entire problem.

It will only be when the bailout number cracks the $1 trillion mark that the complaining will subside. The Treasury will then write the checks, the Fed will finance the required borrowing, and the circus caravan will move on to the next needy group. Which will almost certainly be state and local governments, whose criminally mismanaged pension funds will make the student loan bail-out look like chump change.

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Forgiving Student Loan Debt Would Create Moral Hazard, Exacerbate Problems: Moody’s, by Tyler Durden

Forgiving any class of debt, including student loans, is just like amnesty for illegal aliens: once you do it once, you create an expectation that it will happen again. That’s called moral hazard. From Tyler Durden at zerohedge.com:

Wiping out student loan debt would provide a modest bump to the economy, but could risk “moral hazard” which would eventually make the problem worse, according to Moody’s Investors Service.

The opinion comes as Democratic presidential candidates Bernie Sanders and Elizabeth Warren dangle the prospect of forgiving some or all of the $1.5 trillion in outstanding education debt. Both candidates have also proposed free free college.

Moody’s, however, think the effects of wholesale debt forgiveness at a macro level would be fairly muted.

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