President Biden: Cancel student loans in the first 100 days.
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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 75%, 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.
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.
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. People in "red" states are being hurt significatly worse than in "blue" states. 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 what the Founders wished to avoid.
Critics claiming that cancelling loans will largely benefit people who don't need it are completely wrong! 100% of all borrowers were determined to be "financially needy" as a condition for federal loans. 80% were never going to be able to repay them before the pandemic. What's more: the most successful student loan borrowers tend to refinance their loans out of the federal system, so would not benefit from federal loan cancellation.
Importantly: the people with the highest loan balances aren't younger people who irresponsibly over-borrowed for college; they are people over 50, who actually outnumber people under 25 with student loans. They borrowed very moderately decades ago, but today owe more than triple what people under 25 owe because their loans have exploded with interest, penalties, fees, etc. More than half of people over 75 are in default, and seniors citizens are having their social security seized by the government.
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 President Biden to do what he said he was going to do, 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!
Petition created by Alan Collinge, founder of StudentLoanJustice.Org and author of The Student Loan Scam (Beacon Press).
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