The Biden Regime's Student Loan Plan

by Stephen Lendman

When I attended Harvard and the Wharton graduate school business in the 1950s, higher education was affordable for virtually anyone, the will to successfully complete the academic curriculum the only requirement.

My 1952-53 freshman tuition was $600. By my senior year it was $1,000.

I don't recall my precise graduate school tuition cost.

With summer and part-time jobs during the school year, I earned enough to pay for almost all my tuition, room, board and other expenses for all my higher education.

What was possible then is out of reach today.

For the calendar 2021-22 school year, the cost of tuition, room, board and other fees at the esteemed university I attended is a whopping $74,528.

In 2022, the median US household income is $44,225 — 59.3% of what it costs for a year at Harvard.

The vast majority of college aspiring kids today can't afford the cost of  higher education without substantial student aid.

Yet getting it entraps millions of students in debt bondage because of the high cost of repaying principal and compounding debt — at a time when career opportunities are a shadow of what they were in the 1950s and 60s.

New Deal, Fair Deal, and Great Society programs helped millions of Americans avoid poverty — social programs that worked, what's eroding and disappearing today.

The post-WW II Servicemen's Readjustment Act (GI Bill) provided college or vocational education for 7.8 million returning vets.

Another 2.4 million got VA-backed low-interest, no down payment home loans at a time when their average cost was around $5,000 — letting millions of families afford them.

In the 1940s and 50s, strong unions and high-paying factory jobs with good benefits elevated millions of Americans to middle-class status, what's fast disappearing today. 

The economy then grew most years at around 3.5%. 

Through the 1960s, blue-collar workers were the biggest buyers of many luxury goods and services, including homes and autos.

Things overall are worlds apart today, including the unaffordability of higher education without substantial aid for most students.

Yet student loan debt entrapment creates financial burdens of up to around $100,000.

If unpaid after 30 years, it can be multiples this amount because of debt service costs. 

If default or declare bankruptcy, it's unforgiven. Bondage is permanent.

Exceptions are only granted in extreme hardship cases likely to continue for the term of indebtedness, along with having shown good faith efforts to repay.

In the vast majority of cases, loans must be repaid as long as they're outstanding. Federal laws mandate it. 

If not repaid, wages can be garnished.

So can portions of Social Security and other retirement benefits. 

According to CollegeDebt.com:

Student Loan debt totals $1.977 trillion.

For credit cards, it's $882.6 billion.

And for auto loans, it's $750 billion.

The above figures exclude compounded interest charges.

Over time, they greatly increase debt entrapment.

According to StudentLoanHero.com:

About 48 million Americans have outstanding student loan debt to repay.

In 2022, around 7.5 million student loan borrowers are in default, many others 90 days or more delinquent. 

If economic conditions deteriorate significantly in late 2022 and 2023, as expected, the above percentage may increase exponentially.

Before a temporary repayment moratorium was in place, the average monthly US student loan repayment amount was $300.

As interest rates rise, so will the monthly repayment burden.

If higher education was public for qualified students as are grades 1 - 12, they'd be no student debt.

If the cost of higher education was proportional to incomes as when I attended long ago — instead of rising exponentially over time — student indebtedness would likely be small fraction of its current level.

Today's US high student loan indebtedness is a profit-making racket — part of a scheme to transfer wealth from ordinary people to the nation's super-rich.

And the longer repayment takes, the greater the financial burden because of compounded interest charges.

The Biden regime's student loan deft relief plan leaves the core problem unaddressed.

For individuals earning less than $125,000 annually, debt relief is $10,000.

For holders of Pell Grants to low-income students, it's $20,000 for individuals earning under $75,000 annually, $10,000 if over this amount but less than $125,000.

According to the Committee for a Responsible Federal Budget (CRFB), the Biden regime plan "will cost between $440 billion and $600 billion over the next ten years, with a central estimate of roughly $500 billion."

The Wharton Budget Model's estimate is $570 billion + another $20 billion for the additional four-month repayment moratorium.

Extending it another four months will cost an additional $20 billion.

The CRFB estimates that debt repayment changes announced Wednesday will "likely increase inflation" more than already.

And the plan will "do nothing to reduce the amount of borrowing moving forward," leaving the core problem in place.

WSJ editors criticized the plan, saying it won't reduce defaults, adding:

Federal student indebtedness increased sharply because many "borrowers don't make enough to cover interest and principal payments, so their balances expand."

At this time, it's unclear when the Biden regime plan takes effect.

It applies only to holders of federal student debt.

According to an Education Department press release, 8 million student loan holders automatically quality for debt relief.

About 40 million others must apply by application — not currently available and may not be until near-yearend.

Students ineligible for debt relief — and those without enough of it — are obligated to resume payments in January.

So-called Direct and Perkins Loans — the former from a now-defunct program, the latter borrowed from colleges (though federally-financed) — are not eligible for debt forgiveness.

Nor are loans from private lenders.

It's unclear if the Biden regime plan will hold up if faces a legal challenge in court on grounds of acting without congressional approval.

If so and Supremes have final say, a conservative majority could rule against it.