Donald Trump, Joe Biden: Cancel Student Loans by Executive Order!

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Trillions could be injected into the economy with no tax money needed, and nothing added to the national debt.  

Federal student loans have become a national threat.  Before the Covid-19 virus emerged, 1 in 5 adults in the U.S. had student loans, and over 80% of them were either unable to pay on their loans, or were paying but their balances were going up.  The default rate for 2004 students is 40%, and these people were taking out less than a third of what today's students are compelled to borrow for college. The default rate for current borrowers will easily exceed 60%, if not far higher.  This is more than triple the default rate of sub-prime home mortgages, and this was all true before the pandemic.

By every reasonable metric, this is now a catastrophically failed lending system.

This is not a partisan problem.  More than half of all student loan borrowers identify as being politically independent, or republican. More than 40% never graduated.  All are trapped by a uniquely predatory lending system from which nearly every consumer protection has been stripped- including statutes of limitations, Truth in Lending laws, and most importantly: bankruptcy rights that the Founders called for ahead of the power to raise an army and even ahead of the power to declare war in the U.S. Constitution.  The predatory, hyper-inflationary lending system that has resulted is precisely what the Founders wished to avoid.

The nation currently needs significant new fiscal stimulus.  After having spent trillions- including more than $500 billion in business loans that don't need to be repaid-  Wall Street has bounced back stronger than ever, but tens of millions of jobs have disappeared, and will not be coming back.  There are very few stimulus options left, and those which are currently being discussed will require more tax money, or will increase the national debt...

Except cancelling student loans by executive order.

The President and Secretary of Education have all the authority needed issue an executive order cancelling all federally owned student loans- about 85% of all student debt. Nothing would be added to the national debt, and no tax appropriation would be needed.  This is, by far, the least expensive, and most expedient way to inject trillions into the economy. 

Analysts have predicted that cancelling student loans will increase GDP by about $100 billion for the next ten years, but they do not take into account the borrowing capacity (and thus spending) that such a move would free up. This would be another $1 Trillion injected into the economy in the near and medium term.  Some experts even believe that debt cancellation is the only way to avoid a depression!

Rest assured, the taxpayers will be fine.  The federal government has been profiting wildly on these loans for many years, and decades of White House Budget data show that the Department of Education has even been making a profit on defaulted loans!  On balance, the taxpayer will have very little- perhaps no- net loss when these loans are cancelled.

This is an historic opportunity for the President- whether this one or the next- to cure a recession and create a better higher education financing system for the country.

This is YOUR PETITION.  Word of mouth is the best way we have to make it grow!  Please get a few people you know to sign, and paste the link to it wherever student loan borrowers are likely to see it (Twitter, Facebook, etc.)  Also, contact your local media, and tell them to cover it!

Alan Collinge is founder of StudentLoanJustice.Org and author of The Student Loan Scam (Beacon Press).