President Joe Biden just keeps moving from the frying pan to the fryer. Even the things that are supposed to be good for America are becoming a pain in our collective wallet.
The president is under increasing pressure to do something about the massive student loan debt crisis. Many of the lawmakers in D.C. are breathing down the president’s neck so that he will declare total debt forgiveness for these students with loan debt.
This crisis of school debt now covers 43 million borrowers who together owe approximately 1.6 trillion dollars. But their debt is just the beginning of the problem. Tuition in the country’s schools is rising due to the easy availability of federal loans. This full-circle dilemma is continuing to drive the present crisis.
To put it even more simply, rising tuition costs along with easy federal loan availability are bad enough. This is all happening in the midst of major income stagnation.
William J. Bennett, the former Secretary of Education, saw back in the ’80s that tuition costs were going to rise.
He wrote in an opinion article that “increases in financial aid in recent years have enabled colleges and universities to blithely raise their tuitions, confident that federal loan subsidies would help cushion the increase.”
When the pandemic hit in March of 2020, there was a declaration from Washington that there would be a freeze on student loan payments. This freeze has now been extended five times over the last two presidential administrations. Today, lawmakers are calling on Biden to give the 6th extension on this payment freeze that is going to expire in May. Their gameplay is to keep from asking people to pony up on their debt until after the midterm elections in November of 2022.
Democratic Representative Pramila Jayapal from Washington has been asking Biden to cancel up to $50,000 worth of loans for each borrower. Her rationale has to do with the rising cost of consumer goods like food and gas linked to the war between Russia and Ukraine. And recently, Jayapal challenged the president to just cancel all student debt saying that we needed to “cancel every last penny of student debt once and for all.”
On the one hand, canceling
The student debt crisis increased by 144% over the years 2007 to 2020. It rose from $642 billion to $1.566 trillion. This is according to a 2020 report by the Bipartisan Policy Center (BPC). The number of borrowers increased over the same period from 28 million to 43 million. Part of this increase was due to the Great Recession that began in 2007 which caused a rise in unemployment.
To counter the recession, lawmakers made policy changes that included expanding the Federal Direct Loan program. Prior to this shift, most of the student loans were owned by private lenders. But now that Congress has expanded the program in 2010, the government issues all the loans using funds from the Treasury Department.
This decision created the present crisis because it made access to student loans easy and according to the BPC, created a “vicious cycle of rising tuition and higher debt loads.”
More students had access to funding, colleges and universities could charge higher tuition prices without the threat of decreasing enrollment.
The cost of college has doubled in the past two decades and continues to grow each year by 6.8 percent, according to The Education Data Initiative.
And here is the real last straw, the price of college has significantly exceeded wage increases by more than 100 percent over the past four decades, according to the analysis of education data collected by Georgetown University.
So here we are in a student debt crisis and the next decision by the sitting president probably just won’t add up.