By Evgeny Fedorov @Adobe Stock
Originally posted April 15, 2024.
Do Harvard Law Grads Need Loan Forgiveness?
President Joe Biden’s Education department is run by none other than Elizabeth Warren & Co.. The education department’s $1.6 trillion student loan portfolio would rank as the 5th largest bank in the U.S. by assets, explains Allysia Finley in the WSJ:
Imagine a bank that has made hundreds of billions of dollars in subprime loans. When borrowers start to default, the bank refinances their debt and agrees to forgive their loans if they make minimum payments for 10 to 20 years. When some still can’t make their new, lower payments, the bank eases the terms again.
Borrowers accrue more debt, because the minimum payments don’t cover their interest costs. The bank waives all unpaid accrued interest and cancels debt after 20 years, even if borrowers haven’t been making minimum payments.
It then asks Washington for a bailout so it can underwrite more bad loans. Meantime, the bank has incorrectly computed financial information for millions of borrowers, resulting in lost credit access for those with lower incomes.
Last week, the president announced the administration’s loan forgiveness, bringing the total write-down to “more than $850 billion, including the cost of pandemic forbearance, administrative changes, and eased repayment plans. This is on top of the $500 billion or so the government was already set to write off, largely owing to Obama-era loan refinancing.”
It wasn’t that long ago to have forgotten how “Washington rescued ailing big banks that issued taxpayer-backed mortgages to subprime borrowers.” The Consumer Financial Protection Bureau, Ms. Warren’s brainchild, was born under the bureau’s first director, Richard Cordray, Warren’s protégé.
Last year, the Supreme Court struck down the department’s $430 billion loan write-off. Its generous income-based repayment plans may cancel even more debt over time, continues Ms. Finley.
The University of Pennsylvania’s Wharton Budget Model estimates that they will cost taxpayers $475 billion over the next 10 years.
Some 4.3 million borrowers—anyone who makes less than roughly $34,000 a year—won’t have to pay a penny. A typical graduate with a bachelor’s degree will pay $17,500 less over the life span of his loans, which will be forgiven after 10 to 20 years no matter how little he pays.
The department’s administrative actions have resulted in another roughly $150 billion in loan forgiveness for four million borrowers, including more than $70,000 for nearly 876,000 “public servants.” “
Boasted President Joe Biden last week:
Because of our reforms, 25,000 people a month nationwide have been receiving letters from me” that their debt “is finally going to be forgiven.
According to Penn’s model. the latest installment of debt “relief” will cost a mere $84 billion.
The biggest beneficiaries will be well-off professionals. An estimated 750,000 borrowers with an average of $312,977 household income will save on average of $25,541 from a provision that eliminates debt after 20 years. Do Harvard law grads really need their loans forgiven?
Never has there been a bigger taxpayer scam than the federal student-loan program. Democratic lawmakers in 2010 took over the loan market and claimed fictitious savings to fund ObamaCare. Federal student debt has since more than doubled to $1.6 trillion and would be even higher but for the hundreds of billions that have already been written off.
The student-loan office is the biggest government monopoly and predatory lender in U.S. history. It’s also perhaps the only big business Ms. Warren doesn’t want to break up.
Reportedly, among the top five contributors to Elizabeth Warren’s campaign fund were Harvard University and MIT.
