Biden Admin Unveils New Student Debt Forgiveness Plan

The student loan program is a great example of how a good program can have grossly unintended consequences when the greedy find ways to exploit it.

I fault congress for not following this program as it evolved and not taking any corrective actions along the way. They were all probably too busy pandering for campaign donations and their assigned fund raising duties for their party’s.

My first inclination is to say that I worked my way through College and paid for most of it myself (one quarter was funded by wedding present gifts). I married over the summer after my second year and our first child was born a year later. In order to complete a five year program in four years, there was the quarter from hell, where I took seven 3 quarter hour credit classes in my major, worked three part time jobs and had a newborn and wife to attend to all at the same time. I learned how to go without sleep that quarter. Looking at today’s tuitions, I realize that even with that sustained level of effort, I would not have been able to pay today’s tuitions nor living expenses.

So what went wrong?

The first thing that went wrong, was that many of the loans had a guaranteed principal that was shielded from bankruptcy protection, and that  gave lenders little to no incentive to counsel borrowers about whether or not their course of study would allow them to find employment able to repay these loans. There was no counseling regarding the interest burden which would accrue, particularly with variable interest rates and late payment penalties. 

Secondly, these loans were offered directly to high school students heading off to college with no required parental involvement. Most had little understanding of what impact taking on large debts would have on their lives, because of the false promise that any college degree would automatically ensure financial success.

Finally, the Universities saw then influx of money from these loans as an opportunity to raise tuitions and to raise them dramatically year by year. In order to complete multi-year programs, the students had to borrow much more than expected annually in order to complete their degree programs. To bail out the program would be to lose the ‘investments’ that they had already made, with a lingering debt that still had to be repaid. Some private organizations were outright profiteering be these means.

The student loan program gave the opportunity for banks to lend lots of guaranteed principal loans to naive students. The Universities found a source of funds to upgrade their facilities and incentivize their staff. The students paid for all of this by taking on huge debts, because once the cycle started they were entrapped to continue or lose all that they had already committed to.

The Congress failed these borrowers because, if they had monitored this program, corrective actions could have been taken such as mandatory debt counseling before giving loans and limiting the ability of Universities to raise tuition more than COLA rate for student committed to two or four year degree program.

The failure of our government to monitor this program and take corrective action for the student borrowers abuse by lenders and providers,mandates corrective actions. I think that the Biden plan is thoughtful, far reaching and strikes a realistic balance between those that say ‘hell, no’ and those that say ‘not enough’.

The other corrective actions in this legislation will do a lot to prevent much of the financial abuse fostered on naive student borrowers in the future.

I do think that more relief will be required for those of limited income and that this and future reliefs will be a sound economic investment in economic future of this country - just as the part of the PPP funding that was not directed to Congresspeople’s benefactors, was a solid economic investment in our country’s future.

Step in the right direction but the whole student loans program needs to be reformed as it is:

1) no longer a fair lending program like it was initially

2) college and university education costs need to be affordable especially in institutions receiving tax dollars.

My 1st student loan in the 1970s came with a coupon book which each payment was for a fixed amount with fixed interest at the prime rate. It took 10 years to pay it off but there was a clear end to the loan. College tuition went from $300/credit hour to $700/credit hour during a 3 year program and there is no choice but to pay the increases to receive the degree.

My 2nd loan for a smaller amount accrues interest that gets added into the balance so interest is being calculated on interest like a creditcard. Luckily I've used corporate tuition reimbursement to finance most if it but I can see how someone who doesn't have access to tuition reimbursement programs could run up some large balances because:

1) the total amount of the loan is an unknown

2) total amount of interest is unkniwn

3) there is no credit check to see if people will be able to pay it back 

4) colleges & universities are increasing their tuition rates while the student is locked into the program. My 2nd loan the cost per credit hour changed, as well as how many credit hours each semester is.  Plus a year is now 4 semesters and no longer 2.

The way student loan programs are now they are a moving target that enables educational institution to increase cost/credit hour, credit hours/class, and credit hours to graduate.

We're not going to listen to the people complain about how this increases the national debt or falls on the taxpayers.

If you don't support raising taxes on the wealthy and corporations and fully staffing the IRS to collect those taxes, then you're the reason we have such a high national debt. We can afford this if we collect what we are owed.

When you put aside all the bullshit, look at actual facts, follow the money and who profits from the current structure of the student loan program, a fundamental issue is being ignored by both sides. The majority of the current problems with the student loan programs can be traced back to changes made under Ronald Reagan and Newt Gingrich. 

Yes, the government does have the authority to forgive debts owed to it, just like it forgave $700 billion in PPP loans from US businesses during the pandemic. At least 20 million Americans are going to directly benefit from this single action, and all are lower-class and middle-class Americans! We should all be celebrating for our fellow Americans, y'all! It is unfortunate that a "Me Not We" culture is still so pervasive across Americans' mindsets. Please understand this fact: 20 million Americans now have an extra $10k-20k in each of their pockets to spend on food and bills, which puts more money into our country's economy, boosting GDP! This benefits all of us in the long-run when so many of our fellow Americans can start their own lives and families with a smaller burden of debt. And to everyone still screaming bloody outrage over student loan forgiveness: Where was all this outrage when the government canceled over $700 billion in PPP loans to businesses across America that benefitted even the rich? Would you also say it was that people should not get the COVID vaccine because it be unfair to the people who died before it was released? Whataboutism will kill us all in the end if we continue to use it!

Student loan program changes under the Reagan Administration (1984)

"During Reagan’s two terms as president, dedicated funding for outright grants-in-aid decreased, federal guidelines pushed individual loans, and private bill collectors were brought in to ensure that the hardest kind of debt to escape was whatever you took on for your education. Even more important was the shift in tone and expectation. Public goods became private services, and by the end of the 1980s, the anti-tax, infra-structure-starving, neoliberal Weltanschauung meant that as states cut their budgets, support for higher education was thrown into a cage match with every other necessary public good."

https://www.salon.com/2014/07/05/ronald_reagan_stuck_it_to_millennials_a_college_debt_history_lesson_no_one_tells/

Ronald Reagan stuck it to millennials: A college debt history lesson no one tells

Dramatic, awful changes occurred on my generation's watch -- and it amounts to a fiendishly success...

https://www.salon.com/2014/07/05/ronald_reagan_stuck_it_to_millennials_a_college_debt_history_lesson_no_one_tells/

I feel education is way too expensive in America!  That is what we need to fix.  This is a band aid on a gaping wound.  However, it is nice to see the poor get a break for a change instead of the gazillionaires.

Most naysayers here got pandemic assistance checks & substantial ppp loans forgiven 

You have no right to opine in the negative And if you insist then first return all those funds!

The rich and wealthy want to dump down America and corporations want and need educated people, the problem is educated people question everything and are willing to find out the truth with multiple sources and not the echo chamber, but in saying this not all will take the time to find out!

God made Trump and the Republican Party, Really bad to test the Christian, Muslim, Jews and all religion and their beliefs right or wrong!

If these loans are being paid because of the Racket the student loan industry has over these young people who are struggling to start out in life, and owe more then when the started paying the loans back . Yes they need some type of help from this debt. Many have paid for decade-s and still owe more then the original amount they borrowed, from what I understand. This is not how you should state out your career after finishing college with your first job. You should be saving money too purchase a home, and all of the items the go into that first home, including a start to a Family.

Yes. This helps si many of us who have paid for years in end on time. 

Forgive some portion but not all, and cap the salary amount for those who will be elegible to receive the funds.

Help the students and help the country! The way they have been taken advantage of by predatory loan companies is unconscionable. We need a young and vital work force that is not so encumbered that they cannot be viable contributors to our economy.

I have low income, but I still saved money to pay for my son's college (State University). How is it fair to me that some people  get a free ride?????

The government should get out of the education business.  It seems forgiving school loans is just a bigger tax burden on the middle class. 

The government can't continually print money they don't have and borrow what they can't pay back.  It will all come to a head and burst. 

It is the government's fault for guaranteeing student loans, causing the tuition to go up instead of allowing the market to dictate what tuition should be. 
There isn't a single thing the government doesn't subsidize driving up the price of that commodity.  

What will happen will be the Venezuela effect, wheelbarrow full of cash to buy a loaf of bread. 

It is unastainable and we have our politicians to blame.  The politicians salary should be linked to the national debt.  If it's in the red the politicians won't get paid until the deficit is balanced is greatly reduced or balanced. 

How do you feel about Biden's new buy back student loan plan? Sad. Why so?

1. It is most surely a continued attempt at gaining and regaining past voters to the Democratic fold.

2. It's not fair to those who took the time to pay off their students education loans.

3. The Biden. student loan buyback joins the open border failure seen during Bidens failure approval record we seen.

4. Of course those on the Democratwill deny the facts as stated.

SP 

Socialism at its finest, Next Democrats will be offering free Heroin for the junkie votes.

At this point I am for anything that the GOP hates. They are a perfect barometer of evil. I am also very concerned that hard working Americans on Social Security cannot make ends meet in this economy. I hope Biden throws some funds into that program too, and soon.

This looks great!  

BUT it won't take very long for the Forces of Republican Evil to get this before the Supreme Court.  

Do you think the Supremely Republican Court will allow this to actual go forward?

They took on the debt and need to repay it.  I am generally right in the middle politically, so agree with some social programs where people are in need through no fault of their own, but taking a loan and not repaying is different.

Here we are again. Biden trying to buy votes. This is Unconstitutional. The absurdity is that our nation is so far in debt,we don't need to be paying for other people to get out of paying their debts. I payed for my education, these people should take responsibility for their own finances. It doesn't go away, taxpayers pay for it.

Many US citizen taxpayers have worked hard to attend college and work a job to pay for our college educations. Many have had our children earn scholarships and work their way through college. My husband and I both worked extra jobs to pay my husband's way through college. Now Mr. Biden wants me to pay off college loans for particular students of his choosing. When these students took out college loans, they were made aware that loans we're to be paid back. They need to be held accountable. Also, Mr. Biden needs to obey the law of the land, rather than working so hard to overthrow our Constitution, Bill of Rights, and established law within our nation and states.

Those debts are cruel! The loan sharks and the people who decided the conditions of those cruel loans were fair need to be severely punished.

The government has made money off the student loan program sharing in profits with lenders charging usury rates. Time to use this profit to pay off interest on student loans that should have never been charged at such high rates in the 1st place as a government guaranteed loan had no risk unlike car loans, consumer loans, credit cards, mortgages, etc. 

Consider it a rebate on high interest rates.

 "From 1997 to 2021, the Education Department estimated that payments from federal direct student loans would generate $114 billion for the government. But the GAO found that, as of 2021, the program has actually cost the government an estimated $197 billion"

 https://www.gao.gov/products/gao-22-105365

 https://www.npr.org/2022/07/29/1114560119/student-loan-program-cost

So, I'm a uneducated person but, this is a ginny pig to see if we can expand this idea beyond college debt? 

wipe out all student debt both public and private

like every thing in this country when there are no checks and balances. 

Banks have been robbing these students blind for decades and have gone unscathed!! it's about time they are some what punished for their thievery!! 

The interest rates are what should kill this program, if the loaners weren't so greedy they might have been able to get away with it with a lower interest rate.