President Biden said student loan repayments, which federal authorities had suspended during the pandemic, would resume in May. With just over two months to go, however, his administration is doing everything in its power to make the process of meeting that deadline seem impossible, both for the students and for the Department of Education.
Make no mistake: the May deadline does not come soon enough for middle- and low-income taxpayers, who are among those who will have to pay $1.6 trillion in defaulted loans if borrowers are not required to repay. Most of the loan debt is held by college students, as well as students from wealthier families. Many look forward to substantial paychecks in law and medicine upon graduation.
During the pandemic, the government suspended student loan repayments, suspended accrued interest on accounts, and stopped collecting on defaulted accounts.
>>> Washington’s Hopeful Idea: Giving Students Options When Schools Close
For now, federal officials want you to think the agency just isn’t ready to collect. Department of Education officials use email as their “main communication” method with borrowers, but the agency does not have an email address for one in four borrowers now in default. This is, however, the failure of the agency and not an argument to slow down or stop reimbursements.
Agency officials appear to be looking for ways to continue withholding reimbursement or shifting responsibility to someone else. The GAO says the department will still suspend missed payment reports that typically go to credit reporting agencies and will not ask borrowers in income-driven repayment programs to recertify their income levels for at least six months. . The agency almost encourages borrowers who plan to default in May.
Federal education officials told the Government Accountability Office that it would be “difficult to motivate borrowers to start repaying their loans again.” Good. Old habits are hard to break, but bad habits, like getting into debt on debts, need to be broken. More than one in six of the nearly 46 million people with student loans were already in default before the Biden administration declared a moratorium on payments.
Federal COVID spending envelopes have sent billions to colleges, which have, in turn, delivered checks to students. Florida State University gave some $17.7 million in federal relief spending to 16,000 students. Checks to Penn State students were close to $2,000 per student. Colleges distributed funds based on student need based on information found on financial aid applications, meaning nearly all had loans. Essentially, the colleges have been complicit in what amounts to a federal student loan money laundering program.
experts howl that Biden talked about the student loan forgiveness “every five minutes during the [presidential] campaign” and should wipe out all student loans with the “stroke of a pen,” as Senator Chuck Schumer has suggested. The administration seems to be finding creative ways to do this without signing the legislation.
>>> Mackenzie Scott believes schools should raise your children
Who would benefit the most from debt forgiveness? According to research, graduate students borrow an average of $24,000 per year, while undergraduate students borrow about $7,000. the the most rich 40% of borrowers hold more than half (60%) of all loan debt. As a result, canceling student loans would ensure that borrowers at the lower end of the income scale would receive the least benefit.
Researchers at the University of Pennsylvania and the University of Chicago find that complete student loan forgiveness “emphasize inequalities” because the average individual in the highest income brackets would receive nearly five times as much forgiveness in terms of present value as the average individual in the lowest bracket. Again, canceling student loans would divide Americans by income.
In 2019, just before the start of the pandemic, about two-thirds of Americans does not have hold a bachelor’s degree. If students and graduates won’t be required to repay their loans, taxpayers will be. The Biden administration is not trying to “pardon” student loans in the true sense of the word. They are simply asking those without a college degree to cover the student debt payments of those who do.