One would think that Pete Buttigieg, the youngest candidate in the presidential race- and also a student loan borrower himself- would be a rockstar on the student loan issue. Unfortunately, this is not the case. Buttigieg’s student loan plan does absolutely nothing to address the fundamental injustices that lie at the heart of the student loan problem. Frankly, his plan is insulting to the 55 million voters who are suffering under this predatory lending system either as borrowers, or cosigners.
At the core of the student loan problem is the removal of fundamental- even constitutional- protections that exist for all other loans. Unlike all other loans, student loans have been stripped of both bankruptcy protections and statutes of limitations. This has turned these loans viciously predatory and has given the lending companies -up to and including the Department of Education (which now holds most student loans directly)- a license to steal. It has also enabled breathtaking inflation in the price of college.
In this predatory, hyper-inflationary lending environment, student debt has soared to nearly $2 Trillion (in 2000, this was only about $250 Billion). $100 billion in interest accrues on this debt annually. The class of 2004, who were only borrowing one-third of what is being borrowed today, has a default rate of 40%. One can only guess what the default rate will be for more recent students. Certainly well over 50%.
The human toll of this vicious predation is enormous. People are being forced off the grid, out of employment, into the underground economy. Some are even fleeing the country and others have committed suicide. While very few borrowers want to- and very few ultimately would file for bankruptcy, all of them feel the weight of this predatory lending system on their backs without that threat.
The founders, who they, themselves were being abused at the hands of British creditors, felt so strongly about the importance of bankruptcy protections, they made it a point to call for them in the Constitution, ahead of the power to raise an army and declare war! John Adams said “There are two ways to conquer and enslave a country. One is by the sword, the other is by debt”. The destabilizing student loan system that has been inflicted upon the citizenry proves their wisdom in spades.
This all seems lost on Mayor Pete. His student loan plan looks, frankly, much like recycled boilerplate from the last election. Like Hillary Clinton and other democratic candidates in 2016, he talks about making college tuition-free, increasing the Pell Grant, making modifications to existing loan repayment and forgiveness programs (which we now know are cruel jokes for 99% of the people trying for them), and other nips and tucks here and there. No structural changes, nothing that would bring the price of college down.
I have to say: Mayor Pete is phoning it in on student loans.
While student loan borrowers really had no one from either major party to vote for in the last election, that has changed. At least two candidates- Elizabeth Warren and Bernie Sanders- have put forth meaningful proposals to bring justice to the horribly unjust- and predatory- student loan system. While both of their cancellation plans are somewhat unrealistic, given that they will require congressional approval- and huge appropriations- to pull off, Elizabeth Warren has called loudly for the return of standard bankruptcy protections to student loans and has even pledged that as president- and on day one- she will order the Department of Education to stop opposing student loan borrowers in bankruptcy court. Similarly, Bernie’s staff have said they are willing to make such a pledge if necessary.
The only candidate worse than Buttigieg is (unsurprisingly), Joe Biden. The part Biden played in getting bankruptcy protections removed from private student loans, and his continued refusal to call for the return of bankruptcy protections to federal loans combine to make him the worst candidate in the field.
There is still time for both Biden and Buttigieg to come around. Either or both could publicly pledge that they will both fight for the return of standard bankruptcy protections, and issue an executive order as president accomplishing the same. This is what will give the 30 million distressed borrowers in the country the certainty they need.
But they had better be quick about it.
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