President Biden: Cancel student loans in the first 100 days.
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Trillions could be injected into the economy with no money needed from the Treasury, and nothing added to the national debt.
Federal student loans have become a national threat. Before the Pandemic, One in every 5 adults in the U.S. had student loans, and over 80% of them were either unable to pay, or were paying but their balances were going up. The default rate for 2004 students is 40%, and they took out less than a third of what today's students have to borrow. Nineteen U.S. states owe more in student loans than their entire state budgets. The default rate for current borrowers will likely exceed 75%. This is more than four times the default rate of sub-prime home mortgages.
By every reasonable metric, this is 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. "Red" states are being hurt significantly worse than "Blue" states. All are trapped by a uniquely predatory lending system from which nearly every consumer protection has been stripped- including bankruptcy rights that the Founders called for ahead of the power to raise an army and declare war in the Constitution. The predatory, hyper-inflationary lending system that has resulted is what the Founders feared.
The citizens must not, and should not tolerate this unconstitutional lending scam any longer.
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.
President Biden must to do this in his first 100 days in office. He must also issue an executive order returning bankruptcy protections to federally owned loans, and urge Congress to do the same for ALL student loans.
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.
Claims 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. The highest balance borrowers are over 50. They outnumber people under 25 with student loans and owe 3 times more, despite having borrowed far less. Importantly: the most successful student loan borrowers tend to refinance their loans out of the federal system, so would not benefit from federal loan cancellation.
There simply is no easier, cheaper, more effective, or better targeted way to stimulate the economy.
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 YOUR PETITION. It requires more than your signature to succeed. Please get everyone 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.
THE SUCCESS OF THIS PETITION DEPENDS ENTIRELY UPON YOUR EFFORTS TO MAKE IT GROW. PLEASE DO YOUR PART!
Petition created by Alan Collinge, founder of StudentLoanJustice.Org and author of The Student Loan Scam (Beacon Press).
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