Updated: Sep 29, 2022
The Magic Man…..President Biden recently announced allowing millions to have their student loans completely forgiven…..gone, wiped out. Never to be seen again. And for many, to have up to $20,000 of their balance also forgiven.
So, hold on a second….this is not a forgiveness plan. It is a TRANSFER of DEBT plan that will leave many holding the bag who had absolutely nothing to do with a student/parent voluntarily signing the bottom line. What is next, having your neighbor pay off your car loan?
I had Pell Grants. I had subsidized federal loans. I know firsthand the responsibility I had to repay my government as I worked both in high school and college to keep my debts down. And I know Covid certainly dampened the dreams, temporarily, of finding the right job for some.
There are three main problems with the President’s action:
1. How can one person-- in this case President Biden—increase our nation’s debt by at least $500 billion with one fell swoop of a pen. That is some Olivia Newton John (RIP) “Magic”. I also guarantee you former West Virginia Senator Robert C Byrd would have brought the US Senate to a screeching halt with a copy of the Constitution in his pocket reminding his fellow colleague of the co-equal branches of government doctrine and how the purse strings begin in Congress. Certainly, someone will be able to have their say in court on this matter. Interesting how both President Biden and Speaker Pelosi both said the Executive Branch did have the authority to unilaterally exercise this action.
2. Wrong solution. Why did the President pick $125k as the income limit? Is that the new threshold for being poor in this country? Did I miss the memo? Making $125k in this country is pretty good change unless you choose to live in the ultra-expensive cities. Solution: President Biden could have just put those who could demonstrate need (means testing possibly) in the already existing Income Based Repayment plans that allows some to pay zilch and have their loan forgiven after a certain period.
3. And now the biggest miss….President Biden’s plan is silent on addressing the exorbitant cost of college that will put millions of students into debt, or further debt, as they attend college this fall. And Congress, including Senator Warren, have done nothing to help the cause. Why haven’t college presidents been asked to testify in Congress how they increased tuition at five times inflation? I think it would be great to have the Harvard head talk about their $37 billion endowment fund with little financial assistance to their students, or any students.
So, this is my latest version of Cajun Thoughts that started in 2009 as I began my tenure at the Consumer Bankers Association. It started off as a simple communication to my board of directors then morphed into something larger. Yes, there were times Bobby, Allison or Billy “volunteered” to start the ball rolling but I always had final sign off. And they became experts on deciphering my handwriting on the legal pad.
But in my 4th Chapter, it is all me. Somewhat liberating. I will be writing when the mood strikes me which probably means often.
Future topics: Bank CEO Hearing, The New Workforce, FinTechs, Women’s Golf, Participation Trophies, Work from Home Career Killer Moves, and Louisiana stories….and how October is one of my favorite times of the year.