As the case of student debt crisis grows, millennials are starting to take a stand. Whether it’s taking on more loans or refusing them altogether, students have begun to find ways in which they can pay for their educations without having to take out an expensive loan. While there is no shortage of options available now that allow students and graduates to avoid going into debt for college education, this may not be enough as the trend continues.
The “student loan moratorium” is a campaign that asks for the government to stop making student loans. It was started by a group of students who believe that the current system is not sustainable.
Students from the University of San Diego attend a graduation ceremony in La Jolla, California, on June 17, 2017.
Daren Fentiman/Zuma Press photo
Student loan debtors, have a happy holiday season. Taxpayers will have to make do with venting their frustrations in the spirit of Festivus. That’s the upshot of the Biden Administration’s decision on Wednesday to prolong the payment freeze until May 1 once again. Unlike the previous delay in January, the Administration isn’t claiming that this one is permanent—most likely because it isn’t.
In March 2020, the Cares Act exempted borrowers from making payments on $1.6 trillion in federal student loans and suspended interest accrual until September 2020. Despite having no legal power to do so, President Trump prolonged the freeze until January. By prolonging it until September, Mr. Biden added insult to injury to taxpayers and the separation of powers.
During the summer, the Obama administration rebuffed calls from progressives for another extension. But, like the Centers for Disease Control and Prevention’s rental eviction prohibition, it eventually gave in. The Department of Education said in August that this “last prolongation” was required to “lower the likelihood of delinquency and defaults.” Democrats do not want the outbreak to stop because it is politically advantageous.
Claims of financial difficulty for borrowers were questionable even then, and they’re much more doubtful today, with the jobless rate among bachelor’s degree graduates at 2.3 percent. In November, 1.1 million more people were working than in February 2020. Borrowers have saved an average of $400 per month as a result of the halt.
Borrowers have used their savings to pay down higher-interest debt, invest in the stock market, and make down payments on houses, according to anecdotes. Borrowers would have to be insane to make payments they don’t have to make since the loans aren’t collecting interest.
Since Treasury hasn’t obtained a respite on its debt to finance the loans, forbearance cost the country around $95 billion. The new extension from the Obama administration would bring the total cost to taxpayers to $110 billion, the majority of which has yet to be authorized by Congress.
This might be a deposit for a bigger loan cancellation. According to the Brookings Institution, Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren want the Administration to discharge $50,000 per borrower, which would cost the taxpayers $1 trillion.
In January, Mr. Biden said that he did not believe he had the legal right to cancel student debt. However, in the spring, he requested a legal review from the Education Department and subsequently named Toby Merrill as deputy general counsel. This year, Ms. Merrill sent Ms. Warren a document stating that the President had the power.
After West Virginia Senator Joe Manchin voted against Build Back Better, Mr. Biden is under pressure to placate leftists. According to Politico, White House officials have pushed back meetings with progressive organizations to discuss whether the loan suspension should be extended again, and have said that restoring payments is part of getting back to normal. Mr. Manchin then dropped a surprise.
“With BBB postponed, Child Tax Credits will expire in a couple of weeks, and student loans will resume.” Working people might lose tens of thousands of dollars each month as costs rise,” tweeted New York Rep. Alexandria Ocasio-Cortez on Monday. “That is reason enough for @POTUS to act on student debt as soon as possible, either via a moratorium or cancellation.” Mr. Biden was kind in his response.
Loan forgiveness on a larger scale would be a massive abuse of Congress’s spending authority, but politics always wins. Ms. Warren claims that the administration’s frequent forbearance extensions have already established a precedent. With his poll numbers plummeting and his agenda stuck in Congress, Mr. Biden is likely to rely on executive orders to rule. It’s possible that loan forbearance is only the beginning.
Former Trump economics director Kevin Hassett is interviewed by Paul Gigot for the Journal Editorial Report. Images courtesy of Getty Images Mark Kelly’s composite
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The print version of the December 23, 2021, was published.
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The “student loan forbearance extension 2022” is a tool that allows people to extend the time they are in forbearance. This can help people who are struggling with their student loans and not able to afford payments.
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