Biden’s Trickery, Trump’s Idiocy, Student Loans, and the Presidential Race.
Both Biden, Trump agendas will only perpetuate a WEAPONIZED, catastrophically failed lending program.
Considering all rational metrics, the federal student loan program is catastrophically failed. Before Covid, more than half of all student loans borrowers were unable to make payments on their loans, and 85% had increasing loan balances. The non-payment rate has, astoundingly, increased to 80% today, and the “underwater” rate is likely around 90%, if not higher. Both of these rates will likely trend higher, not lower, between now and the Presidential election.
The pandemic, clearly, was the nail in the coffin for federal student loans.
The stakes are, nonetheless, very high for the nearly 40 million distressed student loan borrowers who are trapped in this dilemma. With the loans now turned back on, $100 Billion in interest/yr again piling up, and standard consumer protections like bankruptcy rights and statutes of limitations remaining uniquely absent from the debt, these borrowers are in an impossible position.
They are extremely vulnerable to abuse at the hands of the Department of Education, it’s servicers, and collection companies- all of whom have proven to be viciously predatory over many years and decades of observation. The weaponized loans are essentially licenses to steal. The borrowers have no leverage, and they can feel it.
Despite the popular myth about borrowers trending strongly liberal, their political leanings are about the same split as the country generally, with a large percentage considering themselves to be independent. These people vote, and will be paying far more attention to the student loan issue this election cycle than last, particularly as collection efforts against them increase in the coming months.
The Republicans have written off these borrowers. Their strategy is to insult, shame, and denigrate these people (20% of their base), to make false claims about loan cancellation being a cost to the taxpayers (it is not), and to even sue to stop loan cancellation (so far successfully).
The irony/hypocrisy of the Republicans fighting for the perpetuation of this predatory loan program- and by extension, the Department of Education/colleges benefiting hugely from it- may be lost on the majority of their feeble-minded (or low/badly informed) voting base, but it is certainly not lost on the 20 million republican/independent borrowers affected. This proved to be a losing strategy in 2020, and will certainly hurt them far worse with distressed borrowers in 2024 who are far more stressed now than in 2020 when payments were paused.
The Democrats, meanwhile, are doing everything possible to make it appear that they are fighting for these borrowers (as they did in 2020). As things stand now, they are poised to beat the GOP far worse than in 2020 with this massive voting block.
The Democrats, however, are completely faking it.
Shortly after winning in 2020, Biden reversed himself, and declared that he would not be cancelling loans by executive order. The unimpressive, $10,000 loan cancellation that he did ultimately attempt was designed-to-fail. Leading Democrats like Nancy Pelosi, Susan Rice, and almost certainly Joe Biden himself, never wanted to cancel loans by executive order, and wanted their feeble attempt at cancellation to be struck down by the Supreme Court.
The Democrats true fealty to the colleges, The Department of Education and the lending system over the borrowers was exposed for all to see in late 2023 when they chose to kill their own legislation that would have returned bankruptcy rights to federal student loans, despite a decades-long-standing promise to do exactly that. Similar to their designed-to-fail loan cancellation efforts, the “new” bankruptcy process they so proudly and loudly point to now has proven to be a cruel joke on student loan borrowers with far less than 1% of bankrupt student loan borrowers receiving any relief.
The loan cancellations they are pointing to today are loans that, by law/rule, should have been cancelled years or decades ago, and amount to only small fraction of the amount of interest that is added to the federal portfolio.
Biden or the next President can point to these cancellation forever, and the national student debt balance (which is growing far more quickly today than at any point in US History), will still grow by about $2 Trillion over the next decade, or even significantly more with capitalized interest and inflation.
The Democrats are about to announce a new plan for executive debt cancellation. They will certainly make very generous promises, similar to the first, $10,000 cancellation plan, announced shortly before the 2022 mid-term elections. The Republicans will, again, mount opposition lawsuits that will ensure that no actual relief is delivered through the election in November. Ultimately, the cancellation will never happen. The borrowers will be left in the frying pan, as happened post 2022.
It worked before, and it will likely work again, all else being equal. The 38 million distressed, desperate borrowers in the country will see no other choice but to vote for them if they need relief (and they do, badly). This all but guarantees Democratic victories in states like Georgia, Michigan, Pennsylvania, Nevada, and other states where student loan debt is particularly bad. Even North Carolina will likely go to the Democrats in 2024.
What is being overshadowed by this announcement: Last week, the Democrats quietly inserted language into a re-authorization bill that would kill the Secretary of Education’s power to cancel student loan administratively, and also raise the amount they can borrow to over $100,000.
Simply put, the Democrats are playing the Republicans like a fiddle, and getting away with it while perpetuating- and perhaps even strengthening- the most vicious, predatory loan scam in U.S. History.
Meanwhile, both political parties (most viciously the Democrats) will refuse to return standard bankruptcy rights, or other meaningful protections to the loans. The overwhelming majority of borrowers enrolled in Income Driven Repayment plans will be disqualified out of the programs over time, and this catastrophically failed, massively damaging lending beast will march a little further down the tracks at an incalculably large cost.
Already, we are seeing early signs of the sort of social damage that we can expect much more of, like these suicides, this particularly gruesome, recent murder in Pennsylania, and a general escalation of anxiety.
This will not go well for student loan borrowers with Trump or Biden winning the election. Choosing between the two is truly a futile, “loser’s dilemma”. Given the overwhelming flood of partisan, media spin on the issue in the absence of good, factual information, we can expect the Republicans to be crushed. Badly.
This could change. As a distressed student loan borrowers myself, I have (both seriously and hilariously), thrown my hat into the ring in the Presidents race, vowing first and foremost to erase and replace the federal loan program. If a significant percentage of student loan borrowers take notice and support the campaign, we could see some major changes, perhaps even before the election.
Also, the unavoidable fact that the loans will not be paid, that ultimately, they will absolutely be cancelled may dawn on both parties, and compel actual reform, although the chances of this happening are probably on a par with my winning the election.
Distressed borrowers everywhere should shake themselves free of the Two-Party-Death-Grip that they are currently stuck in. Loudly and proudly support third party/independent candidates (like me!) who are actually sincere about solving this problem, and do everything they can think of to pressure both parties to, at a minimum, return bankruptcy rights to the loans (a very realistic possibility) before the election, and pray.
It is the Wild West this time around. With RFK, No-Labels probably running well-funded campaigns, and an increasing percentage of the electorate feeling abandoned by both parties on issues that actually and urgently affect their lives/livelihoods, we could well see some major shake ups.
But that, as it always has, will depend upon the citizens and their will to fight.
