There are 45 Million people in the US with student loans. This rises to about 55 million when cosigners are counted- enough voters to elect a president. According to the Institute for Higher Education Policy, about 63% of the class of 2005 are in trouble with their loans (ie they are either in default, forbearance, deferment, or are otherwise delinquent). According to Brookings, the class of 2004 has a 40% default rate, and this class was only borrowing about one-third of what is being borrowed today. Suffice it to say: this crisis is exploding in America’s face as we speak.
There are no bankruptcy protections for these loans There are no statutes of limitations. These combine to give us the most predatory lending instrument this country has ever seen. Moreover, we have a Department of Education—which profits well over $50 Billion per year on the lending program—that is mismanaging the various forgiveness programs in place such that 99% of borrowers who try for loan forgiveness are disqualified, and left owing far more than when they graduated.
This is a crisis. This is a national threat. Leading presidential candidates like Bernie Sanders and Elizabeth Warren understand this, and are proposing radical solutions, including the cancellation of all student loan debt. Nearly all of the candidates are calling for the return of bankruptcy rights to the loans- a more moderate, constitutionally grounded solution that frankly should have happened years ago. Joe Biden, however, is offering almost nothing: The only mention I could find on his platform is basically a throw-away line about simplifying the forgiveness program mentioned above.
What is worse: Biden bears a lot of responsibility for this crisis. As Senator in 2005, Biden was instrumental in passing the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which stripped bankruptcy protections from private student loans. Over 8 years as vice president, nearly $1 Trillion was added to the nation’s student loan tab. I could mention more sinister connections, like how Sallie Mae relocated their headquarters to Biden’s home state after BAPCPA passed, and the nationally televised interview that Biden held about this with Sallie Mae CEO Albert Lord. But I digress.
The point is: Biden will absolutely lose the primaries, and any hope for the presidency if he doesn’t come up with something meaningful to address the student loan crisis…and soon!
At a minimum, Biden should pledge to restore bankruptcy protections to student loans, and offer to do this by executive order if necessary. While the voters don’t want Biden to try to match or beat Sanders’ or Warren’s unrealistic cancellation promises, they do expect Biden to return a floor of fairness to these loans, which is what bankruptcy does.
Joe knows that in the Constitution, the Founders called for uniform bankruptcy laws ahead of the power to raise an army and declare war. He saw firsthand the effect of violating this spirit with the special exception made for student loans. He can either make this right tomorrow, and have a great chance of winning the nomination and the presidency, or he will almost certainly be out of the race by March.
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Feature photo: Shutterstock
Inset: Student Loan Justice