Tag: student loans

How the US Government Created the Student Loan Crisis

President Joe Biden unveiled a sweeping plan on Wednesday to let delinquent student loan borrowers transfer tens of thousands of dollars in debt to taxpayers. If he were a biblically minded leader, Biden would have used his nationally televised press conference to repent of his role in creating the student loan crisis in the first place.

Biden’s student loan bailout lets individuals write off $20,000 in unpaid student loans if they received Pell Grants or $10,000 if they did not. The plan is open to households that make up to $250,000 a year or individuals who make $125,000. It would also reduce the number of people who have to make student loan payments at all, as well as the amount and time they must pay before US taxpayers pick up the tab for their full loan.

While much of the commentary has focused on students who refused to make their loan payments, few have discussed how successive presidential administrations set those students up for failure. The federal government largely nationalized the student loan industry in 2010 via a piece of legislation related to Obamacare, the “Health Care and Education Reconciliation Act of 2010.” The US government now holds 92 percent of all student loans — and the nation’s total student debt has more than doubled, from $811 billion in April 2010 to $1.748 trillion in April 2022.

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Biden made it harder for student-loan borrowers to get rid of debt when they go bankrupt

In 1976, Congress amended the Higher Education Act to make federal student loans nondischargeable through bankruptcy unless the borrower meets the undue hardship standard. The standard requires them to prove that they cannot maintain a minimal standard of living, their circumstances will likely not improve, and they have made a good-faith effort in repaying their debt.

Nearly three decades later, Joe Biden — then a senator serving Delaware — had a large role in making it that standard stricter. In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, and its implications for student-loan borrowers were dire. As signed into law under former President George W. Bush, the bill expanded the undue hardship requirement to borrowers with private student loans, expanding the scope of borrowers who would have to prove their impossible predicament in court. 

During his 2020 presidential campaign, Biden defended his vote for the bill, saying in a Democratic primary debate that he “improved it.”

“I had a choice, it was going to pass — Republican president, Republican Congress, and I offered two amendments to make sure that people under $50,000 would not be affected and women and children would go to the front of the line on alimony and support payments,” Biden said in March 2020. “I did not like the rest of the bill, but I improved it, number one.”

Sen. Bernie Sanders of Vermont, one of Biden’s 2020 rivals who pushed for expansive student debt cancellation, blasted the 2005 bankruptcy law, along with Biden’s support of it.

“That bankruptcy bill made it impossible or very difficult for people to escape from that student debt,” Sanders said during the primary debate. “It was a very, very bad bill.”

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AOC Says Taxpayers Should Have to Pay Her $17K Student Loan—Even Though She Makes $174K a Year

  • As a member of Congress, Rep. Alexandria Ocasio-Cortez makes a whopping $174,000 annually, meaning that she individually earns more than twice the average U.S. household’s income. Yet the progressive Democrat nonetheless thinks that working-class taxpayers should have to pay off her student loan debt.

That’s one of the main takeaways from Ocasio-Cortez’s latest speech on the House floor. In the congresswoman’s remarks, she issued yet another factually challenged and morally distorted plea for “student debt cancellation,” a progressive euphemism for having taxpayers pay off approximately $1.6 trillion in student loan debt. (The loans aren’t “canceled” magically but paid off by taxpayers. Congress can’t just make debts go away.)

This is nothing new, as student debt “cancellation” has been one of Ocasio-Cortez’s pet issues since the beginning of her political career. Yet an interesting twist in this speech is that Ocasio-Cortez uses herself as an example — and directly calls for taxpayers to pay off her financial obligations.

“I’m 32 years old now,” the congresswoman said. “I have over $17,000 in student loan debt, and I didn’t go to graduate school because I knew that getting another degree would drown me in debt that I would never be able to surpass. This is unacceptable.”

I’m sorry, what part of that is unacceptable, exactly?

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