What’s Happening—and Not Happening—with the Federal Student Loans: The Democrats’ Side of the Chamber
By Thomas Hansen, Ph.D.
It is time once again to look at where things are on the pressing topic of the federal student loan balances, who thinks what, and what might happen. The student loan cancellation movement is very much located on the Democrat’s side of the chamber. President Biden made it clear in his campaign he intended to cancel $10,000 of each borrower’s balance.
A drop in the ocean—as we all know—the $10K cancel does almost nothing to alleviate the pain, the suffering, and in some cases the solvency of the great majority of the borrowers. In the meantime, there is no immediate sign of a cancellation of any amount.
Last summer, loan balances were cancelled by the Biden Administration for students who had been duped by for-profit colleges (https://www.cnn.com/2021/07/09/politics/biden-student-loan-debt-cancellation/index.html) that produce no results, but are happy to charge high fees. These are institutions in the tradition of the Trump notion of higher education being a glorified and money-making business focused heavily on high-cost vocational education as opposed to education focused on research and inquiry.
Forgiveness Programs. There is really not much new for educators in this arena. New forgiveness plans impact healthcare workers and others, but not teachers. From what sense the author can make of the forgiveness language, your average professor of history or high school guidance counselor who went back to get an advanced degree reaps no benefit whatsoever from the forgiveness programs as laid out.
The Biden Administration is very proud of the new forgiveness protocols, and they are warning lenders to communicate details correctly and clearly to borrowers (https://www.forbes.com/sites/adamminsky/2022/01/27/student-loan-forgiveness-expansion-biden-official-warns-loan-companies-of-consequences-for-misleading-borrowers/?sh=5929be4b2911).
The Memo. President Joe Biden made news when he told of the research he wanted done to “explore” his ability to cancel student loan debt, pulling in various players to do so—including the US Department of Education and the US Department of Justice—to help in the creation of a special memo (https://www.cnbc.com/2021/04/01/biden-administration-explores-options-for-canceling-student-debt.html).
Since those days, a memo has been discovered but nothing has come of it. At the start a tool that was going to be very helpful the memo lost its magical powers, with President Biden’s administration playing the memo down and apparently hoping everyone will just forget about it.
However, lead Democrats want to see the memo—and they are demanding President Biden release it immediately (https://www.politico.com/news/2022/01/26/democrats-biden-memo-student-debt-cancellation-00002193).
Navient. The largest of the three lenders who agreed to get out of the student loan business, Navient seems to be the most despicable and disgusting of the lot. They have just been forced to make amends to over 66,000 borrowers. Incredibly big news, the story made it to the New York Times. The term used to tell what Navient has done is “predatory lending.” To avoid spending too much time and resources on litigation about how terribly they have misled, overcharged, harassed, and threatened borrowers, in some cases counseling them into expensive forbearance programs instead of other routes, they have settled and have to make amends (https://www.nytimes.com/2022/01/13/business/navient-student-loans.html). Navient will pay a few borrowers $260 and will excuse the loans of more than 66,000 borrowers—worth $1.7 billion.
Again, a relatively small number of borrowers will receive that check for $260—and they will not receive it until this summer.
It seems as though Illinois borrowers—the Prairie State is one of the ones that sued Navient—should contact the office of our Attorney General Kwame Raoul to find out if you are on the excused list or the $260 list. Here is the link recommended:
https://www.illinoisattorneygeneral.gov/consumers/student_lending.html and borrowers can call the Attorney General's Student Loan Helpline and speak to someone directly about receiving help: 1 (800) 455-2456.
US Representative (D-NY) Alexandria Ocasio-Cortez (AOC). Known also as AOC, Representative Ocasio-Cortez has made it very clear she supports major cancellations of student loan balances and has just repeated this forcefully in today’s article based on an interview with her on Yahoo Finance News (https://www.yahoo.com/finance/news/aoc-calls-education-costs-moral-hazard-135917568.html).
President Joe Biden. Campaigning for the 2020 election, President Biden did state he thought the $10,000 cancel made sense and so set himself up to be held to this commitment by people desperate to get out from under at least some of the burden of the loans. However, as of today, February 1st, 2022, he has still not made that move. He has stated, including when he took office a year ago, that he does not want to cancel $50,000 worth of each loan balance (https://www.cnbc.com/2021/02/17/biden-says-he-will-not-support-50k-in-student-debt-forgiveness.html).
Taxpayers. Opinions range greatly among taxpayers—who are also voters. Some conservatives insist all borrowers should pay back the loans. Some insist all borrowers should pay back the loans because they had to pay back theirs (https://www.forbes.com/sites/zackfriedman/2021/11/17/you-paid-student-loans-but-didnt-get-any-student-loan-forgiveness/?sh=75befddf159a).
Taxpayers Who Voted for Biden. The Biden Administration must be keeping in mind who elected Biden. One huge voting block is African-Americans. They voted for Biden, and there are some of them who said they would probably do so again. However, it is important to not forget some Blacks have student loans, and they as college graduates have them with disproportionate figures. Another important issue is that student loan default among Blacks is running already at almost twice the percentage of loans in default among Whites (https://www.cnbc.com/2019/11/19/surging-college-loan-debt-having-disproportionate-impact-on-blacks.html).
In other words, Blacks are going to want relief from student loans already on the books and in danger of going into default. A recent article in Bloomberg Equality reminds the reader that Black wealth could be impacted by as much as a 40 percent gain (https://www.bloomberg.com/news/articles/2021-12-20/calls-for-biden-to-cancel-50-000-student-debt-could-boost-black-wealth-by-40).
US Senator (D-NY) Chuck Schumer. Senator Schumer has made it clear from the beginning he hopes President Biden will cancel $50,000 of each student loan. He has been on Twitter since December, urging the president to go ahead and make those cancellations through the use of an executive order (https://www.foxbusiness.com/personal-finance/schumer-biden-cancel-student-loans-2022).
US Senator (D-MA) Elizabeth Warren. “If there is $50,000 of student loan cancellation, 36 million people wouldn’t owe any federal student loan debt.” Reported by Zack Friedman of Forbes, that is the point Senator Elizabeth Warren wants you to get. At a townhall meeting Thursday, Warren said Biden must cancel student loans “immediately” and thereby provide “permanent total relief” (https://www.forbes.com/sites/zackfriedman/2022/01/30/student-loan-forgiveness-of-50000-would-cancel-student-loans-for-36-million-people/?sh=4a36d9457513). So Senator Warren is holding to her support for the $50K cancel, clearly.
Vice President Kamala Harris. Since the beginning of her campaign, Vice President Harris has talked about $20,000 in cancellations per student loan and not talked about cancellations to all students across the board (https://www.forbes.com/sites/zackfriedman/2022/01/08/what-kamala-harris-means-for-your-student-loans/?sh=efedd1f57245). She has proposed new forgiveness protocols and rules, and she has emphasized the importance of looking at how the students from the lowest-income backgrounds can be assisted by loan cancellations and reductions.
Vice President Harris has recently been quoted as “getting” the student loan problem because she herself took out student loans (https://www.businessinsider.com/student-debt-forgiveness-kamala-harris-charlamagne-tha-god-crisis-real-2021-12). Raised in California, Harris attended Howard University and then went back to California to attend law school (https://en.wikipedia.org/wiki/Kamala_Harris).
What’s Next. There will be another Chicago-based letter-writing campaign to ask President Biden to cancel the loan balances entirely. The idea among some of us education advocates has been to ask for total cancellation of the balances with the plan to accept the $50K cancel. Although many of us in education are not thrilled with that idea, we have decided we could live with that. (Educators wishing to receive an email about the letter-writing campaign may sign on by writing to the author at: tlhansen1@yahoo.com).
Another aspect to this whole student loan situation is the element of reality. Nobody has ever voiced this question that is painfully obvious to us: Do the naysayers on loan cancellation think that holding out and making everyone pay their loans back realize that many simply cannot? The number of people defaulting could be staggering.
How are things in the world of student loan default and repayment currently? Here are some figures which may startle the reader: 7.8% of all student loans are already in default currently, $124.4 billion worth of student loans are in default, over a million student loans enter default each year, and student loan defaults affect 9 million borrowers and their families (https://educationdata.org/student-loan-default-rate#:~:text=One%20out%20of%20every%20ten,is%20in%20defaulted%20student%20loans.).
Whatsoever at the Same Time. Whatever happens may rely on other things happening at the time. For example, if we wind up in a skirmish with Russia or North Korea, President Biden might be able to convince some conservatives it is best to relieve the burden of those families who have sent their members off to war. In other words, if we are at war, perhaps that is a good argument for cancellation.
If there is some other huge pandemic development in the upcoming days before May 1st, such as another variant of the virus, that could be a good argument for cancellation also. Higher infection rates, mutations in the virus, vaccination rates that are still much too low, conspiracy theories that confuse all the important issues, and cockamamie reasons for not wearing the masks over your nose on the bus or train are all contributors to a world still welcoming the virus to embrace victims, sicken them, and in many cases kill them. More of this kind of stuff should make people realize the loan balances should be cancelled.
However, there are many of us who believe that the pandemic is already terrible enough to start with as of the beginning of February, 2022, and that the notion some people have to actually try to pay back those old loans from pre-COVID-19 days is ridiculous and mean-spirited.
White House Press Secretary Jen Psaki. At a recent event, Jen Psaki may have provided us a hint of the way the student loan cancellations may get done: a bill signed by both houses and sent to the president. Psaki responded this way when asked about the likelihood of Biden cancelling (any) amount of the student loan balances: ‘If Congress sends him a bill, he's happy to sign it. They haven't sent him a bill on that yet.’ Jen Psaki told a reporter this and some were not happy to hear her response, saying they found her “cavalier” (Kamala Harris tells Charlamagne tha God the student debt crisis 'is real' and 'we need to deal with it' while avoiding his question about Biden's campaign promise to forgive $10,000 per borrower).
Who We Are and What We Can Do. We educators can write letters, first to the Oval Office and then start sending notes to Congress again, and as we have done several times in the last year.
We will persevere—the educators among us—to try to get some relief at least for the teachers, professors, staff members, and administrators at all levels of education who have not been offered good and relevant forgiveness programs and who should not have to pay back loans when professionals in other fields have had their loans excused.
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