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Heather Cox Richardson: Biden’s Struggle to Reduce Student Debt

By dianeravitch
August 27, 2023 //
102

President Biden has repeatedly tried to reduce the debt that college students incurred and that remains a financial burden for years after they finish college. Republicans have adamantly opposed any effort to relieve millions of students of their college debt, which some have been paying off for decades.

I can’t help but remember my visit to Finland, where I learned that all education, at every level, is tuition-free. How is this possible, I asked. I was told that education is a human right, and no one should pay for a human right. From an economic point of view, the entire nation benefits when more people get a college education. Yet over the past few decades, state governments have reduced their support of public higher education, shifting the burden to individual students.

Heather Cox Richardson wrote about the political dimensions of the student debt issue:

Rising costs of college and cuts to government support for education mean that more than 45 million people across the country owe more than $1.6 trillion in federal loans, an amount equal to the size of the Australian economy. That debt absorbs money people at the lower end of the economic scale would otherwise invest in homes, consumer goods, and so on, and the Biden administration has made it a priority to relieve some of that debt.


When she was the California attorney general, Vice President Kamala Harris took on predatory for-profit colleges and won $1 billion for defrauded veterans and students, and when he ran for office, Biden promised to forgive federal student debt for those earning less than $125,000.


Since the Supreme Court on June 30, 2023, rejected the administration’s plan to forgive more than $400 billion in student debt borrowed through government programs, the administration has turned to other approaches.


In April it began to fix the administrative errors that had kept borrowers from receiving relief through income-driven repayment plans and the Public Service Loan Forgiveness program under which they borrowed the money. Those plans were always intended to offer a way to eliminate student debt, but the Government Accountability Office in 2022 found that poor record keeping meant that that promise had not been honored. On July 14 the administration announced that fixes to those programs would relieve more than 800,000 borrowers of more than $39 billion in student debt.

At the time, Biden did not mince words. “Republican lawmakers—who had no problem with the government forgiving millions of dollars of their own business loans—have tried everything they can to stop me from providing relief to hardworking Americans. Some are even objecting to the actions we announced today, which follows through on relief borrowers were promised, but never given, even when they had been making payments for decades. The hypocrisy is stunning, and the disregard for working and middle-class families is outrageous.”


Since then, the administration has provided relief to others caught in the system as well, including relief of $45.7 billion for 662,000 public service workers, $10.5 billion for 491,000 borrowers with a total and permanent disability, and $22 billion for nearly 1.3 million borrowers who were cheated by their schools, saw their schools close, or are covered by a related court settlement.


Today the administration released the Saving on a Valuable Education (SAVE) plan, a new repayment plan to bring order and relief to federal student borrowers. It is an income-driven repayment plan that is based on a borrower’s income and family size rather than their loan balance, prevents the balance from growing because of unpaid interest, and forgives the remaining balance after a number of years. “The benefits of the SAVE plan will be particularly critical for low- and middle-income borrowers, community college students, and borrowers who work in public service,” the White House said.


Relieving student debt helps those at the lower end of the economy, which will boost economic growth, but there is also a political payoff in these efforts for the administration. As Democratic strategist and pollster Celinda Lake and documentary filmmaker Mac Heller pointed out in the Washington Post in July, in the eight years between the 2016 and 2024 elections, 32 million Americans have become eligible to vote. In the same eight years, as many as 20 million older voters have died.


Lake and Heller note that younger Americans are focused on issues, rather than individuals, and skew progressive (prompting some Republicans to talk about raising the voting age to 25). Fulfilling a campaign promise that overwhelmingly benefits those under 50—parents as well as students—is good politics, blending in with the members of Gen Z (the generation born between the mid to late 1990s and early 2010s) forming political PACs of their own and running for office.

Categories Biden, Education Industry, Higher Education, Student Financial Aid and Student Debt

Heather Cox Richardson: The Supreme Court Is Putting Our Democracy at Risk

By dianeravitch
July 1, 2023 //
87

This is one of the best letters that Heather Cox Richardson has written since I started reading her posts. It puts the current Supreme Court’s radical decisions into historical perspective. This Court, hand-picked by Leonard Leo and the Federalist Society, is engaged in a shameless effort to move the clock back to the world as it existed before the New Deal. This Court threatens our democracy and our rights.

She writes:

Today the Supreme Court followed up on yesterday’s decision gutting affirmative action with three decisions that will continue to push the United States back to the era before the New Deal.

In 303 Creative LLC v. Elenis the court said that the First Amendment protects website designer Lorie Smith from having to use words she doesn’t believe in support of gay marriage. To get there, the court focused on the marriage website designer’s contention that while she is willing to work with LGBTQ customers, she doesn’t want to use her own words on a personalized website to celebrate gay marriages. Because of that unwillingness, she said, she wants to post on her website that she will not make websites for same-sex weddings. She says she is afraid that in doing so, she will run afoul of Colorado’s anti-discrimination laws, which prevent public businesses from discriminating against certain groups of people.

This whole scenario of being is prospective, by the way: her online business did not exist and no one had complained about it. Smith claims she wants to start the business because “God is calling her ‘to explain His true story about marriage.’” She alleges that in 2016, a gay man approached her to make a website for his upcoming wedding, but yesterday, Melissa Gira Grant of The New Republic reported that, while the man allegedly behind the email does exist, he is an established designer himself (so why would he hire someone who was not?), is not gay, and married his wife 15 years ago. He says he never wrote to Smith, and the stamp on court filings shows she received it the day after she filed the suit.

Despite this history, by a 6–3 vote, the court said that Smith was being hurt by the state law and thus had standing to sue. It decided that requiring the designer to use her own words to support gay marriage violated the First Amendment’s guarantee of free speech.

Taken together with yesterday’s decision ruling that universities cannot consider race as a category in student admissions, the Supreme Court has highlighted a central contradiction in its interpretation of government power: if the Fourteenth Amendment limits the federal government to making sure that there is no discrimination in the United States on the basis of race—the so-called “colorblind” Constitution—as the right-wing justices argued yesterday, it is up to the states to make sure that state laws don’t discriminate against minorities. But that requires either protecting voting rights or accepting minority rule.

This problem has been with us since before the Civil War, when lawmakers in the southern states defended their enslavement of their Black (and Indigenous) neighbors by arguing that true democracy was up to the voters and that those voters had chosen to support enslavement. After the Civil War, most lawmakers didn’t worry too much about states reimposing discriminatory laws because they included Black men as voters first in 1867 with the Military Reconstruction Act and then in 1870 with the Fifteenth Amendment to the Constitution, and they believed such political power would enable Black men to shape the laws under which they lived.

But in 1875 the Supreme Court ruled in Minor v. Happersett that it was legal to cut citizens out of the vote so long as the criteria were not about race. States excluded women, who brought the case, and southern states promptly excluded Black men through literacy clauses, poll taxes, and so on. Northern states mirrored southern laws with their own, designed to keep immigrants from exercising a voice in state governments. At the same time, southern states protected white men from the effects of these exclusionary laws with so-called grandfather clauses, which said a man could vote so long as his grandfather had been eligible.

It turned out that limiting the Fourteenth Amendment to questions of race and letting states choose their voters cemented the power of a minority. The abandonment of federal protection for voting enabled white southerners to abandon democracy and set up a one-party state that kept Black and Brown Americans as well as white women subservient to white men. As in all one-party states, there was little oversight of corruption and no guarantee that laws would be enforced, leaving minorities and women at the mercy of a legal system that often looked the other way when white criminals committed rape and murder.

Many Americans tut-tutted about lynching and the cordons around Black life, but industrialists insisted on keeping the federal government small because they wanted to make sure it could not regulate their businesses or tax them. They liked keeping power at the state level; state governments were far easier to dominate. Southerners understood that overlap: when a group of southern lawmakers in 1890 wrote a defense of the South’s refusal to let Black men vote, they “respectfully dedicated” the book to “the business men of the North.”

In the 1930s the Democrats under President Franklin Delano Roosevelt undermined this coalition by using the federal government to regulate business and provide a social safety net. In the 1940s and 1950s, as racial and gender atrocities began to highlight in popular media just how discriminatory state laws really were, the Supreme Court went further, recognizing that the Fourteenth Amendment’s declaration that states could not deprive any person of the equal protection of the laws meant that the federal government must protect the rights of minorities when states would not. Those rules created modern America.

This is what the radical right seeks to overturn. Yesterday the Supreme Court said that the Fourteenth Amendment could not address racial disparities, but today, like lawmakers in the 1870s, it signaled that it would not protect voting in the states either. It rejected a petition for a review of Mississippi’s strict provision for taking the vote away from felons. That law illustrates just how fully we’re reliving our history: it dates from the 1890 Mississippi constitution that cemented power in white hands. Black Mississippians are currently 2.7 times more likely than white Mississippians to lose the right to vote under the law.

The court went even further today than allowing states to choose their voters. It said that even if state voters do call for minority protections, as Colorado’s anti-discrimination laws do, states cannot protect minorities in the face of someone’s religious beliefs. In her dissent, Justice Sonia Sotomayor wrote that for “the first time in its history,” the court has granted “a business open to the public a constitutional right to refuse to serve members of a protected class.”

It is worth noting that segregation was defended as a deeply held religious belief.

Today, using a case concerning school loans, the Supreme Court also took aim at the power of the federal government to regulate business. In Biden v. Nebraska the court declared by a vote of 6 to 3 that President Biden’s loan forgiveness program, which offered to forgive up to $20,000 of federally held student debt, was unconstitutional. The right-wing majority of the court argued that Congress had not intended to give that much power to the executive branch, although the forgiveness plan was based on law that gave the secretary of education the power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs…as the Secretary deems necessary in connection with a…national emergency…to ensure” that “recipients of student financial assistance…are not placed in a worse position financially in relation to that financial assistance because of [the national emergency]”.

The right-wing majority based its decision on the so-called major questions doctrine, invented to claw back regulatory power from the federal government. By saying that Congress cannot delegate significant decisions to federal agencies, which are in the executive branch, the court takes on itself the power to decide what a “significant” decision is. The court established this new doctrine in the West Virginia v. Environmental Protection Agencycase, stripping the EPA of its ability to regulate certain kinds of air pollution.

“Let’s not beat around the bush,” constitutional analyst Ian Millhiser wrote today in Vox, today’s decision in Biden v. Nebraska “is complete and utter nonsense. It rewrites a federal law which explicitly authorizes the loan forgiveness program, and it relies on a fake legal doctrine known as ‘major questions’ which has no basis in any law or any provision of the Constitution.”

Today’s Supreme Court, packed as it has been by right-wing money behind the Federalist Society and that society’s leader, Leonard Leo, is taking upon itself power over the federal government and the state governments to recreate the world that existed before the New Deal.

Education Secretary Miguel Cardona called out the lurch toward turning the government over to the wealthy, supported as it is by religious footsoldiers like Lorie Smith: “Today, the court substituted itself for Congress,” Cardona told reporters. “It’s outrageous to me that Republicans in Congress and state offices fought so hard against a program that would have helped millions of their own constituents. They had no problem handing trillion-dollar tax cuts to big corporations and the super wealthy.”

Cardona made his point personal: “And many had no problems accepting millions of dollars in forgiven pandemic loans, like Senator Markwayne Mullin from Oklahoma had more than $1.4 million in pandemic loans forgiven. He represents 489,000 eligible borrowers that were turned down today. Representative Brett Guthrie from Kentucky had more than $4.4 million forgiven. He represents more than 90,000 eligible borrowers who were turned down today. Representative Marjorie Taylor Greene from Georgia had more than $180,000 forgiven. She represents more than 91,800 eligible borrowers who were turned down today.”

In the majority opinion of Biden v. Nebraska, Chief Justice John Roberts lamented that those who dislike the court’s decisions have accused the court of “going beyond the proper role of the judiciary.” He defended the court’s decision and urged those who disagreed with it not to disparage the court because “such misperception would be harmful to this institution and our country.” But what is at stake is not simply these individual decisions, whether or not you agree with them; at stake is the way our democracy operates.

Norman Ornstein of the American Enterprise Institute didn’t offer much hope for Roberts’s plea. “It is not just the rulings the Roberts Court is making,” he tweeted. “They created out of [w]hole cloth a bogus, major questions doctrine. They made a mockery of standing. They rewrite laws to fit their radical ideological preferences. They have unilaterally blown up the legitimacy of the Court.”

In a shot across the bow of this radical court, in her dissent to Biden v. Nebraska, Justice Elena Kagan wrote that “the Court, by deciding this case, exercises authority it does not have. It violates the Constitution.”

—

Categories Accountability, Biden, Bigotry, Billionaires, Cardona, Miguel, Civil Rights, Cruelty, Dark Money, Democracy, Disruption, Elections, Ethics, Evil, Extremism, Fraud, Gender, Higher Education, History, Inequity, Injustice, Justice, Race, Racism, Religion, Shame, Student Financial Aid and Student Debt

U.S. Supreme Court Trounces Gay Rights, Student Debtors

By dianeravitch
June 30, 2023 //
68

The United States Supreme Court has been on a rightwing roll, eliminating affirmative action yesterday, now upholding discrimination against gays, and striking down Biden’s attempt to provide relief to student debtors. The five conservative justices rewarded the faith that Leonard Leo and the Federalist Society placed in them. They were chosen based on their extreme ideology.

This morning, the Court ruled that a person who objects to gays need not do business with them. Colorado bans discrimination based on sexual orientation, but the Extreme Court struck down the state law. The justices in the majority based their decision of free speech rights, upholding the view that the web designer’s free speech was impaired if she had to do work for gay people.

The Boston Globe reported:

WASHINGTON (AP) — In a defeat for gay rights, the Supreme Court’s conservative majority ruled Friday that a Christian graphic artist who wants to design wedding websites can refuse to work with same-sex couples.

The court ruled 6-3 for designer Lorie Smith despite a Colorado law that bars discrimination based on sexual orientation, race, gender and other characteristics. Smith had argued that the law violates her free speech rights.

Smith’s opponents warned that a win for her would allow a range of businesses to discriminate, refusing to serve Black, Jewish or Muslim customers, interracial or interfaith couples or immigrants. But Smith and her supporters had said that a ruling against her would force artists — from painters and photographers to writers and musicians — to do work that is against their beliefs.

“The First Amendment envisions the United States as a rich and complex place where all persons are free to think and speak as they wish, not as the government demands,” Justice Neil Gorsuch wrote for the court’s six conservative justices.

The student debt decision was also 6-3, with the conservative justices knocking out Biden’s efforts to reduce the financial burden on millions of people.

The New York Times reported:

The Supreme Court’s conservative supermajority struck down President Biden’s proposal to cancel at least some student debt for tens of millions of borrowers, saying it overstepped the powers of the Education Department.

In a 6-to-3 decision, Chief Justice John G. Roberts Jr. wrote that a mass debt cancellation program of such significance required clear congressional authorization.

Citing the same authority the Trump and Biden administrations used to pause student loan payments during the pandemic, Mr. Biden promised in August to forgive $10,000 in debt for individuals earning less than $125,000 per year, or $250,000 per household, and $20,000 for those who received Pell grants for low-income families.

Nearly 26 million borrowers have applied to have some of their student loan debt erased, with 16 million applications approved. But no debts have been forgiven or additional applications accepted in light of the legal challenges.

I hope that all 26 million indebted people vote for Biden. He tried.

Categories Bigotry, Civil Rights, Democracy, Education Industry, Higher Education, Student Financial Aid and Student Debt

By dianeravitch
June 30, 2023 //
4

Categories Bigotry, Civil Rights, Democracy, Education Industry, Higher Education, Student Financial Aid and Student Debt

American Prospect: Why Obama-Era Economists Hate Biden’s Student Debt Relief

By dianeravitch
September 10, 2022 //
88

Lindsay Owens and David Dayen note that some of the most outspoken critics of Biden’s decision to forgive up to $20,000 in student debt are Obama-era economists. Republicans have called it “socialism” and worse, but some Democratic economists are also upset. Owens and Dayen attribute their anger to the failure of Obama’s policy to solve the home foreclosure crisis.

They write:

President Biden’s long-awaited decision to wipe out up to $20,000 in student debt was met with joy and relief by millions of borrowers, and a temper tantrum from centrist economists.null

Moments after the announcement, former Council of Economic Advisers Chair Jason Furman took to Twitter with a dozen tweets skewering the proposal as “reckless,” “pouring … gasoline on the inflationary fire,” and an example of executive branch overreach (“Even if technically legal I don’t like this amount of unilateral Presidential power.”). Brookings economist Melissa Kearny called the proposal “astonishingly bad policy” and puzzled over whether economists inside the administration were “all hanging their heads in defeat.” Ben Ritz, the head of a centrist think tank, went so far as to call for the staff who worked on the proposal to be fired after the midterms.

Histrionics are nothing new on Twitter, but it’s worth examining why this proposal has evoked such strong reactions. Elizabeth Popp Berman has argued in the Prospect that student loan forgiveness is a threat to the economic style of reasoning that dominates Washington policy circles. That’s correct. But President Biden’s elegant and forceful approach to tackling the student loan crisis also may feel like a personal rebuke to those who once worked alongside President Obama as he utterly failed to solve the debt crisis he inherited.

Let’s be very clear: The Obama administration’s bungled policy to help underwater borrowers and to stem the tide of devastating foreclosures, carried out by many of the same people carping about Biden’s student loan cancellation, led directly to nearly ten million families losing their homes. This failure of debt relief was immoral and catastrophic, both for the lives of those involved and for the principle of taking bold government action to protect the public. It set the Democratic Party back years. And those throwing a fit about Biden’s debt relief plan now are doing so because it exposes the disaster they precipitated on the American people.

One reason the Obama administration failed to swiftly help homeowners was their obsession with ensuring their policies didn’t help the “wrong” type of debtor.

President Obama campaigned on an aggressive platform to prevent foreclosures. Larry Summers, one of the critics of Biden’s student debt relief, promised during the Obama transition in a letter to Congress that the administration “will commit substantial resources of $50-100B to a sweeping effort to address the foreclosure crisis.” The plan had two parts: “helping to reduce mortgage payments for economically stressed but responsible homeowners,” and “reforming our bankruptcy laws” by allowing judges in bankruptcy proceedings to write down mortgage principal and interest, a policy known as “cramdown.”

The administration accomplished neither. On cramdown, the administration didn’t fight to get the House-passed proposal over the finish line in the Senate. Credible accounts point to the Treasury Department and even Summers himself (who just last week said his preferred method of dealing with student debt was to allow it to be discharged in bankruptcy) lobbying to undermine its passage. Summers “was really dismissive as to the utility of it,” Rep. Zoe Lofgren (D-CA) said at the time. “He was not supportive of this.”

Summers and Treasury economists expressed more concern for financially fragile banks than homeowners facing foreclosure, while also openly worrying that some borrowers would “take advantage” of cramdown to get undeserved relief. This is also a preoccupation of economist anger at student debt relief: that it’s inefficient and untargeted and will go to the “wrong” people who don’t need it. (It won’t.)

For mortgage modification, President Obama’s Federal Housing Finance Agency repeatedly refused to use its administrative authority to write down the principal of loans in its portfolio at mortgage giants Fannie Mae and Freddie Mac—the simplest and fastest tool at its disposal. Despite a 2013 Congressional Budget Office study that showed how modest principal reduction could help 1.2 million homeowners, prevent tens of thousands of defaults, and save Fannie and Freddie billions, FHFA repeatedly refused to move forward with principal reduction, citing their own efforts to study whether the policy would incentivize strategic default (the idea that financially solvent homeowners would default on their loans to try and access cheaper ones).

Virtually everyone involved with the housing system was stunned that the options of cramdown and principal reduction weren’t taken. Banks literally held meetings in expectation of Obama’s team requiring writedowns, until they didn’t.

Instead, the Obama administration rolled out the industry-backed Home Affordable Modification Program (HAMP), relying on the voluntary cooperation of servicers to modify mortgages. The program was, even by the administration’s own modest objectives, a failure, ultimately reaching less than a quarter of the three to four million homeowners it hoped to target. In the critical first two years, the administration did not even spend 3 percent of what they were allotted to save homeowners.

Just as with cramdown, one reason the Obama administration failed to swiftly help homeowners was their obsession with ensuring their policies didn’t help the “wrong” type of debtor. When Obama first announced HAMP in 2009, he said the program would “not reward folks who bought homes they knew from the beginning they would never afford.” The resulting “Goldilocks” proposal, with its focus on weeding out undeserving borrowers, would not be available to homeowners with incomes too high or too low and would be backstopped with voluminous income and financial verifications (in many cases, more than what was required to take out the loan in the first place). Treasury also tweaked the program numerous times as they went along, confusing servicers and borrowers. The barrage of paperwork ground the program to a halt at many servicers, and ultimately nearly a quarter of modifications were rejected on the grounds that incomplete paperwork was provided.

But it was much worse than that. The mortgage servicers used HAMP like a predatory lending program, squeezing homeowners for as many payments as possible before canceling their modifications and kicking them out of their homes. These companies had financial incentives to foreclose rather than modify loans. In one particularly excruciating example, the servicer arm of Bank of America offered its employees Target gift cards as a bonus for placing borrowers into foreclosure.

This was also by design, or at least benign neglect. Then–Treasury Secretary Timothy Geithner candidly told officials that the program was intended to help banks, not borrowers. The purpose was to “foam the runway” for the banks, Geithner said, with homeowners and their families being the foam crushed by a jumbo jet in that scenario. If the goal was just to let the banks use HAMP for their own benefit, it’s not surprising that would come at homeowners’ expense.

And those banks executed their plan fraudulently, using millions of forged and fabricated documents to illegally foreclose on people. Even with this new leverage against the banks, the administration failed to provide equitable relief. A new program, the National Mortgage Settlement, promised one million principal reductions but delivered only 83,000. Meanwhile, millions more unlawful foreclosures ensued, and no high-level executive was convicted in association with any of these crimes.

In short, the policy apparatus ultimately failed to assist the majority of people who sought help, a suboptimal policy outcome by any metric. Student debt relief skeptics like Furman spent the Obama years advocating for privatizing Fannie and Freddie, rather than apologizing for falling so short on dealing with the massive debt overhang, which stunted the economic recovery.

President Biden’s approach has been markedly different and, if well implemented, is poised to be extremely effective. The simplicity of the program design, with its straightforward cancellation thresholds ($10,000/$20,000) and eligibility criteria (Pell status and household income), means the policy should deliver nearly 90 percent of its relief dollars to those making less than $75,000 a year. Will some small amount of relief dollars land in the bank accounts of borrowers who will make higher incomes in the future? Absolutely. Is preventing that outcome more important than delivering relief to 43 million borrowers? Of course not.

It’s not just the policy design that is a rebuke to the old guard’s theory of debt relief; it’s also the rhetoric. Notably, in his 20-minute speech announcing the rollout of the student loan relief program, President Biden didn’t mention “bad debtors” once. He didn’t spend a single breath on the individual failings of borrowers, make any reference to their poor decision-making, or nod to a handful of unscrupulous debtors trying to game the system.

Instead, he talked about the failings of our higher-education system, in which “an entire generation is now saddled with unsustainable debt.” Instead of blaming borrowers, he showed them empathy. Instead of talking about borrowers taking advantage of the system, he vowed to hold “colleges accountable for jacking up costs without delivering value to students” and crack down on “schools luring students with the promise of big paychecks when they graduate only to watch these students be ripped off and left with mountains of debt.” And he headed concerns about moral hazard off at the pass, vowing to “never apologize for helping the working and middle class.”

Moreover, Biden wasn’t afraid to use all of the tools available to him to get results for indebted borrowers. The Obama administration was given funding from Congress, an explicit mandate for foreclosure prevention, and at the end, a settlement with the banks that authorized even more money. They still failed, because they were more interested in deluded notions of “personal responsibility” than acting to avert disaster.

Biden has flipped the Beltway consensus on policy design around debt forgiveness and modeled a path for viewing student debt as a national crisis, rather than an individual failing. It’s a stunning reversal of the Obama-era consensus and one that casts that failed legacy of mortgage debt relief in an even darker light. Biden has shown us there was an easier, softer way all along.

Categories Accountability, Biden, Economics, Education Industry, Equity, Higher Education, Student Financial Aid and Student Debt

Republicans Who Complain about Student Loan Forgiveness Are Hypocrites

By dianeravitch
August 27, 2022 //
33

A number of Republicans received Paycheck Protection Program loans, which were forgiven.

The White House tweeted a response to Republican Congressman Vern Buchanan of Florida, who complained about debt relief for college students. He received a Payroll Protection Program loan from the federal government of $2.3 million. The loan was forgiven.

@WhiteHouse

Congressman Vern Buchanan had over $2.3 million in PPP loans forgiven.

Buchanan had tweeted:

@VernBuchanan

“As a blue-collar kid who worked his way through college, I know firsthand the sacrifices people make to receive an education. Biden’s reckless, unilateral student loan giveaway is unfair to the 87 percent of Americans without student loan debt and those who played by the rules.”

So it’s okay for the federal government to give Congressman Buchanan $2.3 million, which he doesn’t have to pay back, but not to help college kids drowning in debt with a student loan forgiveness of $10,000-20,000?

Republican Mike Kelly of Pennsylvania complained on Twitter:

Asking plumbers and carpenters to pay off the loans of Wall Street advisors and lawyers isn’t just unfair. It’s also bad policy.

Yeah, all those millions of kids who got student loans are rich now, right?

@WhiteHouse tweeted:

Congressman Mike Kelly had $987,237 in PPP loans forgiven.

But that’s not all:

Categories Hypocrisy, Student Financial Aid and Student Debt

Marjorie Taylor Greene Received a Big Federal Loan, Which Was Forgiven

By dianeravitch
August 27, 2022 //
14

Marjorie Taylor Greene was one of many Republicans complaining about President Biden’s decision to forgive $10,000-20,000 of debt that college students owe for taking out federal loans to finance their education.

The White House released a response: Rep. Marjorie Taylor Greene applied for and received a federal Paycheck Protection Program loan of more than $180,000. The loan was forgiven.

Unlike college students who had a debt of $10,000 forgiven, her debt of $180,000 was forgiven. And she complains about them! That’s called chutzpah.

Alternet reports:

Highlighting the hypocrisy of Greene and other Republicans claiming it’s unfair to have loans forgiven at taxpayer expense, the White House also posted to Twitter that U.S. Rep. Matt Gaetz (R-FL), U.S. Rep. Mike Kelly (R-PA), U.S. Rep. Vern Buchanan (R-FL), and other Republicans attacking the administration for its student loan forgiveness program, had massive PPP loans forgiven….

According to ProPublica, Rep. Greene’s family construction business took out a PPP loan on April 10, 2020, for $182,300. In total, including interest, the federal government forgave her and her family’s loan totaling $183,504.

The PPP loans, also known as the Paycheck Protection Program, originated under President Donald Trump and was facilitated via the Small Business Administration. The were $800 billion in PPP loans made, according to NBC News.

Watchdogs estimate billions in fraudulent PPP loans were forgiven.

Categories Accountability, Hypocrisy, Student Financial Aid and Student Debt

Slate: The Long History of Forgiving Debt

By dianeravitch
August 27, 2022 //
34

Republicans are outraged that Biden is forgiving the student loan debt of millions of borrowers by $10,000-20,000. They have denounced loan forgiveness as “socialism,” a “big government giveaway,” and worse.

They are on the wrong side of history and politics.

I can tell you from the two years I worked in the U.S. Department of Education that there is a student loan industry that has a powerful lobby. They want student debt to be as high as possible and they want the rates to be as high as possible. Biden’s decision is very disappointing to their lobbyists.

Zachary D. Carter writes in Slate that there is a long history of forgiving debt. This is a terrific article. I urge you to read it.

He begins:

In 1920, the world’s most famous economist, John Maynard Keynes, was digging through old books on the economy of the ancient world, when he discovered something startling. All his life he had been taught that civilization depended on ironclad financial certainty. Without a stable currency and dependable debt contracts, commerce could not exist. Governments that meddled in such matters were thought to be asking for social chaos.

But the documents he perused on Ancient Greece, Rome, Babylon, Assyria, and Persia showed him something else entirely. Throughout history, political leaders had abolished debts and managed the value of their currencies—another way to revise debts—as routine matters of government policy. Keynes was electrified. A year earlier, he had staked his reputation on a call to cancel the largest debts the world had ever seen—those accrued by the governments of Europe during World War I. If these debts were not cleared, Keynes had argued, the international trading system would break down, leading to misery and another war. Predictably, the financial establishments on two continents responded to this apparent heresy with alarm. Now Keynes had discovered precedent for his ideas — thousands of years’ worth, from Hammurabi in ancient Babylon to Solon of Athens.

[As a side note, the Treaty of Versailles imposed massive debt on Germany. Had that debt been forgiven, there might have been no World War II.]

Indeed, debt relief has always been the handmaiden of debt itself. In the United States we have a formal legal process for eliminating nearly all forms of debt: bankruptcy. When debts become unbearable, people file for bankruptcy to have them discharged in court. In the 15 years preceding the pandemic, more than 14.3 million people filed for bankruptcy, and in the decade prior to the pandemic, more than 20,000 businesses filed for bankruptcy every year, with a high water mark of 60,837 in 2009. Debts are discharged every day in the United States, and have been for decades.

Indeed, debt relief has always been the handmaiden of debt itself. In the United States we have a formal legal process for eliminating nearly all forms of debt: bankruptcy. When debts become unbearable, people file for bankruptcy to have them discharged in court. In the 15 years preceding the pandemic, more than 14.3 million people filed for bankruptcy, and in the decade prior to the pandemic, more than 20,000 businesses filed for bankruptcy every year, with a high water mark of 60,837 in 2009. Debts are discharged every day in the United States, and have been for decades.

Not that you would know from the apocalyptic conservative outrage emanating from social media and cable television this week. When President Joe Biden announced his new student loan relief program on Wednesday, Senate Majority Leader Mitch McConnell decried it as “socialism” and Utah Sen. Mitt Romney called it a naked attempt to “bribe the voters.” Reason magazine’s Robby Soave declared it a “fuck you to every financially responsible person in the country.” These reactions belie centuries if not millennia of economic history.

Capitalism would collapse without debt relief systems. Businesses get in trouble all the time—both good businesses that would work fine without a few onerous debt deals, and bad businesses that need to be liquidated or restructured. Sometimes bad things just happen. People get divorced. They get injured and are overwhelmed by medical bills. They get laid off. They have to pay for a parent’s funeral or care for children with special needs. And yeah, some people just don’t know how to manage their money and buy things they can’t afford. But we do not consign such people to never-ending financial servitude as a result of unforeseen circumstances, or even totally reckless spending habits. We have a formal process to eliminate debts and start over, with a reasonable chance of living a healthy financial life.

But not for students who borrow money to attend college. In 2005, Congress passed a law that made it next to impossible to discharge almost any form of student debt. Even the most creative consumer lawyers estimate that only about $50 billion—less than 3 percent of the $1.75 trillion in outstanding student debt—had the potential to be wiped away, but only if students could persuade a court that they had been egregiously wronged, by say, non-accredited programs or institutions that didn’t actually offer degrees.

Biden’s new student debt relief program exists because student debt is currently ineligible for the ordinary process that Americans use for extinguishing excessive debts….

Nor are the recipients of Biden’s aid particularly wealthy. The plan flatly excludes anyone who makes more than $125,000 a year from participation. According to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model, about half of the money will go to borrowers in the bottom half of the income spectrum, with only 2.5 percent of folks breaking into the top 10 percent receiving relief. The median personal income in the United States—the 50 percent line—is $35,800. This makes sense once we consider the actual demographics of the typical American college student, who is not an Ivy Leaguer bound for the 1 percent. About 40 percent of all undergraduate students attend community colleges, about one-third of whom take out student loans to help pay for their education. The average community college borrowergraduating with more than $13,000 in debt. There are also racial disparities in student debt: According to a Brookings Institute analysis, Black borrowers shoulder roughly double the amount of debt to attend college that white borrowers do.



Categories Biden, Education Industry, Higher Education, Student Financial Aid and Student Debt

Cong. Rosa DeLauro Applauds Biden Action to Relieve Student Debt

By dianeravitch
August 24, 2022 //
28

Connecticut Member of Congress Rosa De Lauro is chair of the House Appropriations Committee, one of the most powerful members of Congress. She is a staunch friend of working people and public schools.

WASHINGTON, DC – Chair of the House Appropriations Committee Rosa DeLauro (CT-03) today released a statement following President Biden’s announcement of his student debt plan.

“Americans are living paycheck to paycheck. The biggest corporations are using their money to rig the game, and costs are on the rise.

“I applaud President Biden for taking a necessary step today to level the playing field for working Americans by cancelling $10,000 in student debt for borrowers who earn under $125,000 a year and up to $20,000 for Pell Grant recipients. This will completely wipe out debt for millions of borrowers and give many the economic security they need to invest in a small business, buy a home, or simply just take care of their families.

“Today’s announcement builds on historic actions by the Biden administration to provide student debt relief to borrowers in need. By discharging loans for borrowers ripped off by for-profit colleges, making administrative improvements to the Public Service Loan Forgiveness Program, and canceling loans for permanently disabled borrowers, the President has already approved $36 billion in student loan relief. In addition, the Biden administration is drafting improvements to income-driven repayment programs, including proposals I have pushed for in my Affordable Loans for Any Student Act, so that no borrower has to struggle to make monthly payments.

“Democrats in Congress and President Biden are delivering on commitments to make college more affordable, make student loan repayment manageable, provide relief for those in need, and hold predatory colleges accountable for ripping off students. Americans need a government that works for working families and the vulnerable – not one that answers to the wealthiest and biggest corporations. Today’s announcement is a huge step toward dealing working Americans back in.”

 

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delauro.house.gov

Categories Biden, Education Industry, Education Reform, Higher Education, Student Financial Aid and Student Debt

Biden Cancels Student Debt for Millions of Debtors

By dianeravitch
August 24, 2022 //
102

President Biden issued sweeping student debt relief for people earning less than $125,000 a year.

The Washington Post reports:

White House officials are planning to cancel up to $20,000 in student debt for recipients of Pell Grants as part of their broader announcement on Wednesday of student debt forgiveness, four people familiar with the matter said.


The extra debt forgiveness for Pell recipients would be in addition to the expected cancellation of up to $10,000 in student debt for most other borrowers. The White House’s plans are only expected to apply to Americans earning under $125,000 per year, or $250,000 per year for married couples who file taxes jointly, the people familiar said.


Roughly 43 million federal student loan borrowers would be eligible for some level of forgiveness, including 20 million who could have their debt completely canceled, according to internal documents shared with The Washington Post. The White House estimates that 90 percent of relief will go to people earning less than $75,000.

Categories Biden, Higher Education, Student Financial Aid and Student Debt
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