Biden’s Student Debt Scam: Debt Restructuring, Not Forgiveness
An email from the Department of Education obtained by Nation Public Radio (NPR) says the Biden administration may extend the student loan freeze for the fourth time, begun under the Trump administration. The email instructed loan service companies not to contact borrowers about the May 1 deadline, although these companies are required to give one month’s notice before repayment begins.
The email follows an appearance by White House Chief of Staff Ron Klain on the Pod Save America podcast, where he hinted there was a possibility the reimbursement pause could be extended beyond May 1 deadline.
There is no doubt that the motivation behind the delay in restarting debt payments is a cynical political calculation. The Democratic Party plans to use the delay to position itself as supporters of some form of debt cancellation in the midterm elections.
While campaigning for President Biden, he repeatedly said that “we should forgive a minimum of $10,000/person in federal student loans, as proposed by Senator Warren and his colleagues.”
However, those with student loan debt should be warned, the current proposal under consideration for “pardon” is actually a restructuring of student debt, a far cry from Biden’s original commitment.
The magnitude of the proposed “relief” pales in comparison to the mountain of student debt.
Even if his election promise were applied to all 43.4 million federal borrowers, it would result in $434 billion in canceled loans, or just over a quarter of the $1.61 trillion in federal student loans. Outstanding private student loans, which amount to $136.31 billion according to Nerdwallet, would not be canceled under this arrangement. Also, “total parent debt plus,” where parents take on debt on behalf of their student children, building up $103.6 billion in debt and 3.6 million borrowers, would not be affected.
More importantly, there is no plan to reduce, let alone eliminate, the astronomical costs of education that currently prevail. This means that the one-off discount would do nothing for future borrowers. Students would still go into massive debt due to the astronomical cost of college. Loan companies and the federal government would continue to profit from student loans, and higher education would continue its trajectory toward a privilege for the wealthy instead of a public good for all.
Despite this reality, the mainstream media has sought to portray Biden’s actions on student debt as somewhat progressive. Forbes recently reported, for example, that Biden wrote off $15 billion in debt. Not only does this figure represent a drop in total debt, but it also covers more devious actions. The figure cited by Forbes includes those involved in the civil service loan write-off, which has been around for decades. Nerdwallet accurately described it as “a federal program designed to encourage students to pursue relatively low-paying careers,” the cancellation of now-defunct ITT Tech student loans (ITT is a private university that closed abruptly in 2016 ) and the Borrower’s Defense against Reimbursement, which covers loans to defunct institutions.
That is, a small portion of student borrowers have become disabled and unable to make repayments, have been able to prove they were defrauded by a scam, or hold an undergraduate degree. non-existent establishment, or that they have a low-paying job and have therefore obtained the “pardon”.
Additionally, the Department of Education has identified 100,000 borrowers with $6.2 billion in cancellable debt as part of an October 2021 change to civil service loan forgiveness rules, which was also introduced. in the media as a great victory for the students. This figure is a fraction of total student borrowers and total debt (0.2% and 0.4%, respectively). Additionally, this change primarily involves adjustments to how payments are counted for forgiveness, such as counting past student loan repayments for forgiveness, payments made before loan consolidation, obtaining credit for the rebate if the wrong repayment plan was used, and similar issues.
Even the debt cancellation plans that are presented as more radical, on closer inspection, are incredibly limited and unserious. For example, Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren have proposed that student loan forgiveness be limited to student borrowers earning up to $125,000, with the possibility that Congress or the President will set an even lower threshold, much like the stimulus check for the COVID -19 pandemic which had an income threshold of $75,000.
Democratic Senator Patty Murray, chair of the Senate Health, Education, Labor and Pensions Committee, which has advocated extending the payment freeze until at least 2023, explained that her reason for maintaining the gel was to fix the “broken” refund system. the Washington Post wrote at the time that “Murray said she is pleased to see the administration considering another extension as there is much work to be done before payments resume.”
“The roster leader is finalizing a new revenue-driven repayment plan.” The “solution” is to consolidate four “income-focused plans” into one, far from canceling student debt, let alone making higher education affordable.
Student loans are also on the government’s balance sheet, meaning any remission would be paid for by cuts in social spending.
Just as Democrats have removed all remaining pandemic protections amid mass death and infections so big banks and corporations can continue to profit, they are poised to funnel ever more money to the military. as part of US imperialism’s drive towards war with Russia and China. The US military budget passed in the Senate is $782 billion. While both sides pretend there is no money for canceling student loans or making higher education free, billions are being spent on war and propping up Wall Street
Biden himself bears great responsibility for the student debt crisis since he was a US senator from Delaware. His home state is infamous as a favorite location for the headquarters of a giant corporation seeking to evade taxes, regulations and controls of all kinds, which the president often brags about. In 2005, along with 17 other Democratic senators, he voted to pass the Bankruptcy Abuse Prevention and Consumer Protection Act, which tightened the bankruptcy code so that private student loans are stripped. bankruptcy protection.
Biden received hundreds of thousands of dollars in campaign contributions from credit card companies ahead of the vote. Tighter bankruptcy protections led to debt tripling over a decade, locking student debtors into endless ruinous payments.
For the Biden administration, “cancel student debt” is a convenient slogan used to try to fool some of the young voters.
Workers and young people seeking a solution to this crisis or any of the other major crises must fight for socialism, independent of parties and representatives of Wall Street.