Editorial: New loan repayments happy, student borrowers | Editorial

People view the New Year as a time of hope and renewal.

For a significant subset of Americans, 2022 will be the time for renewal of student loan payments.

The federal government pressed the pause button on many, but not all, student loan repayments in March 2020 as closures linked to the COVID-19 pandemic confused the economy and left more than 15 million Americans Unemployed. Despite progressives’ calls for a further postponement in the event of a pandemic, President Joe Biden intends to uncheck the pause button on February 1.

According to the latest statistics from the New York-based Education Data Initiative, Virginia is home to 1.06 million student borrowers, more than half of whom are under 35, who owe a total of approximately $ 41.9 billion. dollars. Virginia residents with student loans have an average debt of $ 39,472, one of the highest debts per borrower in the country.

In the United States, three in 20 people repay student loans, for a combined total of about $ 1.75 trillion, just behind mortgages in terms of consumer debt categories. The COVID-19 pandemic crisis has pushed up collective student loan debt by more than 8%, the largest increase in a single year since 2013.

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Raising the subject of crushing student loan debt often pulls critics out of the woods, similar to those who seem to be lurking in to shame those struggling with drug addiction. To paraphrase: “It’s not a national problem, it’s a ‘you’ problem, which you imposed on yourself with your bad choices. You should have gotten a better paying job. You should have chosen a more lucrative career.

Maybe in some cases these reprimands are relevant. But then again, a 2020 American Bar Association Young Lawyers Division pre-pandemic survey showed that 56% postponed or chose to forgo a home purchase altogether, 48% chose not to have their own home. children and 1 in 3 chose not to marry because of student loan debt.

Once the pandemic started and law firms started canceling job postings, those numbers certainly got worse.

The federal CARES law relief program passed in 2020 has helped at least 20 million of those 48 million borrowers. Payments on federally held student loans and collections on delinquent loans have been suspended. Those who were still repaying private loans such as the Stafford Loans were mostly not eligible for the loan repayment break. For them, February 1 makes no difference.

The easy access that students and their families have to student loans without any upper limit contribution to the ever increasing costs of tuition fees. Something that is not a routine part of the student loan process, however: Potential borrowers are not made aware of the risk they face when it comes to their potential postgraduate ability to repay the borrowed amount. Higher education institutes, which are paid regardless of the cost of tuition and regardless of what ultimately happens to the student, have no incentive to do so.

There are loan forgiveness programs available, but they are difficult to obtain and even in the rare event that a borrower appears to meet the criteria, the likelihood of their forgiveness request being rejected is extremely high. Data from the Education Data Initiative shows that less than one percent of student loan holders get their debt forgiven.

A key difference between student loans and most other types of loans is that filing for bankruptcy will not make them go away. Usually. There are David-style v. Goliath-style court cases where a former student who is now drowning in debt fought off a lawsuit from an education loan lender. Some even successfully sued for the dump. They remain rare exceptions to the status quo – for the overwhelming majority, even a debilitating circumstance like illness or accident won’t make any difference, because a student loan remains locked in like a lamprey.

During his campaign to topple Donald Trump, former Vice President Biden has said he wants to write off $ 10,000 in federal student loan debt per lender. While it was never clear how far this forgiveness would be extended, it is so far a moot point as it has not happened.

Instead, Biden focused on making existing forgiveness programs work more as they promise, resulting in around $ 12.7 billion in loans being canceled, which looks good, except that is less than a tenth of a percent of existing debt.

Questions remain as to whether Biden’s promise is even achievable under the current circumstances – in Congress, Republicans do not support the idea, and Blue Dog-style senators like Joe Manchin and Kyrsten Sinema would likely stifle it. Biden himself has suggested that an executive order might not survive a legal challenge.

In April, he called on the education and justice departments to investigate his authority to write off or write off student debt. So far, they have not reported.

For those who yearn for student debt cancellation, there is a great deal of irony in the fact that the man they are looking for for that relief is someone who bears a great deal of responsibility for creating the situation. which they hope will be resolved.

One of the main proponents of the Bankruptcy Abuse Prevention and Consumer Protection Act 2005, which made student loans almost immune from bankruptcy discharge and inflated student debt was none other than Delaware Senator Joe Biden.

A champion of credit card companies, which moved to Delaware to take advantage of regulations tailored for them and which helped Biden’s election campaigns, Biden spoke at the time of loan debt and bankruptcy in a way that is reminiscent of those media scoldings we mentioned, while it scoffed at the idea that lenders should be stuck holding the bag for “the broken system”.

In fact, dating back to the late 1970s, Biden has always backed bills that made it easier for students to get into debt than they could afford and more difficult to evade loans if they couldn’t pay. .

Perhaps he is in no rush to hear what the education and justice ministries have to say about his power over student debt.


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