Voters of all stripes have had up to nine years now to become accustomed to Donald Trump and the baggage he brings, even as it continues to pile on through multiple criminal trials. But for the first three years of his presidency, criticism about President Joe Biden’s suitability for the presidency were largely limited to his opposition in the Republican Party and conservative media.
Now, with the 2024 election looming, it’s getting harder and harder for Biden loyalists to dismiss the notion that their candidate comes with quite a bit of his own baggage.
I’m not referring to his obviously declining cognitive state (it’s the truth, folks,) or his deadbeat son (also the truth, folks.) I’m talking about the job he’s doing. Sooner or later, voters — even many of the most out-of-touch ones — will begin to reflect on the last three years of Biden’s policies to decide if he’s worthy of re-election.
The record he has to defend includes a bungled withdrawal from Afghanistan, during which American weapons were left behind for the Taliban to traffic to other terrorists; out-of-control illegal border crossings that have left cities overrun with unauthorized migrants, some of whom are alleged to have committed heinous crimes; and the highest inflation rates in over 40 years.
Student loan policies, on the other hand, were supposed to brighten Biden’s record and buy — uh, I mean, earn him some goodwill from voters. His Department of Education’s original plan of canceling up to $20,000 in student debt seemed like a good way to buy — sorry, earn the appreciation of as many as 43 million borrowers, especially the estimated 20 million Americans who would see their debt completely erased.
But it wasn’t so grand in the eyes of the law. Biden’s plan was struck down by the Supreme Court, which ruled that the administration’s statutory authority to modify parts of the student loan program didn’t actually allow it to “rewrite the statue to the extent of canceling $430 billion” in student loans.
Within days of the Supreme Court’s June 2023 ruling, Biden announced a “Plan B” program to buy votes with American taxpayer dollars — darn it, I mean, reduce student debt via a rule-making process under the Higher Education Act. The Saving on a Valuable Education (SAVE) plan, set to take full effect this July, is actually projected to cost the American taxpayer even more than Biden’s failed first plan: over 10 percent more, at $475 billion over 10 years.
Once again, the plan is being challenged in court by multiple states. We’ve yet to see how that plays out.
It’s not surprising to think that many of the 43 million Americans with student loan debt would fall all over themselves to vote for the guy doing whatever he can get away with to erase it. But student loan borrowers aren’t the only ones feeling a strain on their monthly budgets.
To those who did not pursue higher education, it’s not exactly welcome news to hear that the loans financed by their taxes won’t be repaid. To those who scrimped and saved and sacrificed and worked to pay for their families’ or their own college education, it’s a swift, straight slap in the face.
Worse, the criticism remains the same as it was the first time Biden tried to buy votes — jeez, I mean, forgive student loans en masse in 2022: the problem isn’t actually fixed. Not only is it not fixed, it’s not even acknowledged. We read and hear all the time stories about how after years of payments, some borrowers still owe more on their loans than the amount they borrowed in the first place. But very few American adults are able to actually understand how that happens, let alone articulate it to their 17-year-old kid who just got into their dream school.
Here’s how college graduates come to owe more down the road than the actual amount they borrowed: We let them.
We let them take on debt that mushrooms — sometimes doubling, tripling or even quadrupling — because we let them borrow large sums of money that they pledge to pay back — with annual interest tacked on. And when they can’t afford the monthly payment, we offer them options such as paying a smaller amount based on their income. Or we let them go into “forbearance” and halt payments entirely for a period of time.
But the interest? That isn’t based on income. Interest doesn’t go into forbearance. It accrues at the same rate regardless of how little the borrower is able to pay every month — or whether they’re paying at all. The longer it takes to pay off that loan, the more interest accrues, and the larger the loan balance becomes.
A Pew report from 2022 cited research from the Congressional Budget Office finding that 75% of borrowers on income-driven repayment plans owed more than what they originally borrowed within five years of entering repayment.
None of this should be surprising. It’s how loans work. Every year, I pay interest on my mortgage totaling a percentage of my principal balance. That annual interest is divided by 12 and added to each of my monthly payments.
If I took out a $200,000 loan to buy a house for a 30-year term at a rate of 4% (good luck finding a rate like that in the current market,) my payments would be just over $950 per month, according to a mortgage calculator I found online. By the end of my loan, I will have paid $143,739 in interest, for a total of $343,739. That’s perfectly normal.
If I told my mortgage holder that I could only pay $675 a month, it would take me 110 years to pay off that same loan. My interest would total almost $700,000. That’s not normal. Nor would that arrangement ever be permitted by any financial institution.
But that’s precisely the arrangement upon which we allow young adults to enter if they need to pay for college, with one exception: Unlike other loans, many student loans on income-driven repayment plans see the remaining balance waived after 25 years of payments. Even before the Biden administration started proposing policy to stiff the taxpayer for student loan repayment, the taxpayer was already shouldering much of the burden.
No one person or group is responsible for this mess. Culpability is shared in tripartite: The federal government gives money to students who can’t repay it, the students borrow money they can’t repay and give it to colleges for a pricey education, and the colleges charge enormous amounts, knowing that because of student loans, there’s no such thing as a student who can’t afford to pay for school. Whether a student can afford to pay back a big loan is apparently a separate question.
But one person and one group claim to be solving this crisis: President Joe Biden and his administration. Have they made the grade? That probably depends on who you ask.
A 49-year-old violin instructor who finished graduate school in 1998 shared with Business Insider a letter he received in January. It read, “Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) … in full.” Unable to pay his bills, he had put his student loans in forbearance — halting payments while interest continued to accrue. The forgiven amount totaled $249,255. With his newfound financial freedom, he intends to join his meditation teacher in India for a sabbatical. He’s probably pretty pumped about the Biden plan.
New college students needing loans might be less than thrilled. They will be paying the highest interest rate in over a decade. Last Tuesday, the Department of Education announced the interest rates on federal student loans for the upcoming academic year. Federal direct undergraduate loans will carry a fixed interest rate of 6.53%, an 18.7% increase in the interest rate from just last year.
Their parents might also be gritting their teeth at the moment. The same administration boasting about student loan forgiveness was also instructed by a bipartisan Congress to simplify the Free Application for Federal Student Aid, or FAFSA, which is required for all students applying for any kind of federal loans, grants or work-study. The rollout of the new “simplified” FAFSA has been marred by numerous delays and technical issues, causing colleges nationwide to miss their deadlines for awarding financial aid. In short: it’s a disaster.
As of May 7, 28% of colleges still had not sent financial aid offers to incoming students. Some who will not be able to afford tuition without aid are opting for schools less expensive than what they initially chose. Some may not attend at all, prompting enrollment concerns that could punch some colleges right in the purse.
As for those who worked and lived frugally, saving money and earning scholarships and paying back their loans on time, I don’t have to guess what they think of the student loan policies put forth by the Biden administration. Under the Biden plan, the taxpayer loses, and the taxpayer isn’t too happy. You can take that to the bank.
Comments: 319-398-8266; althea.cole@thegazette.com
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