The truth about student loans – WSJ
The Democrats covered up the costs of their student loan buyout in 2010, and now they’re fooling Americans about their campaign to cancel student debt. But South Carolina Rep. Jim Clyburn, a member of the House Democratic leadership, gave the game away this weekend.
Progressives seem to have realized that sweeping student loan forgiveness is not popular with Americans who have not gone to college or who have paid off their loans. That is why they are now saying that the cancellation of $50,000 per borrower will be a windfall for the working class. Senator Elizabeth Warren says 40% of borrowers with student debt never finished college. If it were a business, the Federal Trade Commission could sue it for false advertising.
More than half of borrowers owe less than $20,000 in debt. The borrowers Democrats really want to help are white-collar college-educated people who account for 56% of the $1.6 trillion in federal student debt. Mr Clyburn said in an interview with Bloomberg: “When you see a student coming out of college – law school or professional schools – with a debt of $130,000, $150,000, it cripples the economy at more than one title.”
Wasn’t higher education supposed to be an investment? Well, that doesn’t pay off for millions of Americans, especially those with expensive college degrees. Many colleges require students to fund their doctorate, which can take six to seven years, but humanities doctorates in 2019 earned an average of $53,000. Machinists earn more.
Mr Clyburn may also be trying to help historically black colleges and universities with less than stellar student outcomes. Morris College in Sumter, SC, has a 25% graduation rate. The median income of a borrower who enrolled ten years ago is $27,644 and the debt of those who graduated is $31,450. Some 97% of borrowers do not repay their loans.
Progressives also claim that President Biden has the legal power to cancel debt. He doesn’t. But they want him to do it anyway and dare the courts to stop him. As Mr Clyburn explained, “So my trick is to use your executive power and let the courts deal with it.”
This appears to be the Administration’s guiding legal principle. Do whatever you want until the courts say it’s illegal. Recall its moratorium on illegal evictions and its mandates for vaccines and masks.
Mr Clyburn was less blunt in saying ‘students deserve’ loan forgiveness because ‘the forces in place have increased interest and all sorts of fees on student loans’. Fact check: Student loan interest rates have been cut by about half since 2008 thanks to the “forces in place” on Capitol Hill.
In 2013, Congress cut interest rates on student debt after Ms Warren yelled that the federal government was making money on student loans by charging borrowers higher interest than federal borrowing costs. . It was another sham. Lower interest rates have served as just another subsidy for colleges, allowing them to burden borrowers with more debt.
Today, the federal government is losing tens of billions of dollars because many borrowers have taken on so much debt that they cannot pay even the most modest interest. So now the Democrats want to bail out the underemployed borrowers they and the colleges have duped.
To avoid the appearance of helping the wealthy, Mr Biden is considering limiting loan forgiveness to borrowers earning up to $150,000 ($300,000 for couples). Yet that would still cover 97% of all borrower debt, including the most recent law and medical graduates. The student loan scam goes on and on.
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Appeared in the print edition of May 3, 2022.