While watching the talking heads during a TV business news interview recently, I noticed a banner streaming across the bottom of the screen reading “SCOTUS to Decide Fate of Student Debt Relief Plan,"
The banner was subtly shifting the blame for a poorly defined and likely illegal student debt bailout program away from the White House and Congress and laying it on the Supreme Court.
Over the past couple of decades, students have applied and signed up for ever-increasing amounts of loans to help pay for their education. Many of these former students have now entered the workforce and are finding it difficult to repay these loans, often because the loans were used to pay for college degrees that were of little value in the real world.
Politicians smelled an opportunity to help these struggling debtors with the expectation the grateful debtors would provide ongoing support for those politicians in the future (read buying votes).
When the Covid-19 emergency was first declared in early March of 2020, the White House through the U.S. Department of Education, waived student loan interest for three months and gave borrowers the option to suspend payments for two months. The CARES Act was signed on March 27, 2020, which extended the interest waiver, suspended payments on federal student loans through September 2020, and suspended collection and related penalties for borrowers with defaults on federal student loans.
This was generally viewed as being reasonable considering the negative impact Covid-19 was having on the economy.
A series of deferral decisions made by both the Trump and the Biden administrations have brought us to the mess we are in today.
There is an estimated $1.75 trillion total student loan debt outstanding today, consisting of both federal and privately funded loans.
· Average amount owed is $29,000 per borrower.
· Just over 90% of total student debt is federal student loans – remainder is private student loans.
· Between 50% and 60% of students in both public and private four-year colleges and universities have student loans.
The Biden administration has initiated a three-part student loan cancellation program aimed at helping selected student debt holders “to recover from the strains associated with the Covid-19 pandemic”.
Let’s be clear, the student loan program problem and other economic challenges weren’t caused by the Covid-19 pandemic. They were caused by the colossally bungled government response to Covid-19 including the shutdown of schools and most of the economy.
The politically inspired program currently being adjudicated in the Supreme Court has three main parts:
1) Provide targeted debt relief. (another form of economic racism)
· Department of Education will provide $20,000 in debt cancellation to Pell Grant recipients holding D of E loans and up to $10,000 in debt cancellation to non-Pell Grant recipients.
· These cancellations are subject to upper income limits of $125/$250 thousand for single/married loan holders. (one more wealth redistribution scheme)
2) Make the student loan system more manageable.
· Cut monthly payments in half. Low-income borrowers’ monthly repayments are capped at 5% (formerly 10%). The impact on the repayment period is unclear.
· Change Public Service Loan Forgiveness (PSLF) program to permit time worked at a non-profits, in the military, or in federal, state, tribal, or local governments to be appropriately credited toward loan forgiveness. The WH brags about “more than 175,000 public servants already had more than $10 billion in loan forgiveness approved.”
3) Reduce the future cost of college and holding schools accountable. This part of the program lacks specifics but offers many promises:
· This WH championed the largest increase in Pell grants in over a decade.
· This WH will continue fighting to double maximum Pell grant levels and to make community college free.
· There is little discussion of how any of this will be funded.
If you want to give someone a break on student loan repayments, then you must get Congress, “we the people” to agree to that break since it’s our money you are playing with.
We the people, through our representatives in Congress, have said no, pay off your debts like everybody else.
This whole mess has been dumped on the Supreme Court with the hope they can somehow rescue us from the financial disaster that will inevitably result from this politically expedient loan bailout circus.
How can we turn this ill-advised thinking around and keep it from happening again?
Our constitution provides a way to do this. Article V of the Constitution allows state legislatures to call for a Convention of States to propose constitutional amendments designed to rein in the excessive power and breadth of our federal government.
You can support these efforts by getting involved with the Convention of States, a national, non-profit, grassroots organization dedicated to imposing fiscal restraints on the federal government, limiting the powers and jurisdictions of the federal government and its agencies, and imposing term limits on government officials and members of Congress.
Learn more about this at the Convention of States website. Take action by signing the petition. Get involved. Volunteer your time and talent as part of America's largest grassroots movement.
You can help to build momentum and rally against the cancerous growth of our federal government and slow the resulting insidious erosion of our basic rights and freedoms.
