Over the past couple of weeks, a deluge of nearly identical mainstream media reports have flooded into the zeitgeist claiming that the federal government is set to cancel over $100 billion in student loans through various forgiveness programs. Based upon a recent Government Accountability Office report, stories in The Wall Street Journal, The Washington Post, The New York Times and countless other news sources all warn of a massive imminent financial hit to the taxpayers as a result of these forgiveness programs.
These stories, and the GAO report they are based upon are not entirely correct. Here, are some various quoted and sourced opinions as to why I believe this:
The truth is that the Department of Education, which profits some $50 billion per year on the student loans program, and even profits on defaults, has no desire or intention to forgive any student loans, and is administering the programs so as to kick as many borrowers out of these programs as possible. The various student loan forgiveness programs that the department oversees are being run much like credit card teasers, where only about 15 percent of the people trying for the benefit actually get it.
In April of last year, it was reported in the Chronicle of Higher Education that, already, a whopping 57 percent of the people who were enrolled in the Income Based Repayment program had been kicked out for failing to adequately verify their income, an annual, onerous process that the Department of Education could easily do independently through the IRS. Income verification is just one of many grounds the department has for expelling borrowers from these programs.
What a Donald Trump White House will mean for student loans. https://t.co/RNuK39eGXB
— U.S. News Education (@USNewsEducation) December 10, 2016
One can only guess what percentage of people have been expelled from the various forgiveness programs for other reasons — reporters have never asked the question.
I suspect that that the 15 percent success rate that the credit card customers see may actually be higher than what student borrowers achieve. Clearly, the large majority of student loan borrowers trying for these forgiveness programs will be kicked to the curb owing far, far more than when they entered. The $108 billion figure so often repeated by the media, by my own estimate, is closer to $15 billion, and when considering the increased revenue taken from the people who will be ejected (owing far, far more than when they entered), it vanishes entirely, and actually becomes a massive revenue source for the government!
For those who have monitored the Department of Education over the past decade, this comes as no surprise. The department jettisoned all but the pretense of working for the citizens it claims to serve years ago.
The government has collected about $1.1 billion since 2001 from Social Security recipients over unpaid student loans https://t.co/MyDcFBYNCm
— Wall Street Journal (@WSJ) December 21, 2016
The Office of Federal Student Aid, which was set up and is now run, largely, by former lending executives, is all about making money — and lots of it. The list of obvious corruptions, conflicts and public failings of the company in its own institutional quest for wealth and power is very long, and its history of protecting its own bottom line over all else is well documented.
The mainstream media needs to quit acting as a mouthpiece for the student loan swamp people, who act not to protect the taxpayers but rather to protect big government and perpetuate a predatory lending system as long as they can from their marshy bogs, hidden deep inside the Beltway. Reporters in the mainstream media need to start doing their jobs, stop taking what they hear from these people as patently true, and at a minimum seek out the truth about how many people actually are being expelled from these forgiveness programs, and correct the public record. Many lives are being wrecked by the predatory student lending system, and this is enabled and perpetuated by bad journalism.
— Lou Dobbs (@LouDobbs) December 18, 2016
I can only hope that Donald Trump is serious when he promises to drain the swamp, and that his distrust of the media extends to this area, where the swamp clearly has taken full charge and is apparently free to sow whatever nonsense serves it in even the most respected journalistic outlets. Trump needs to not be sucked in by this sort of cheap media ploy.
If he looks carefully at this lending system, he will quickly realize that it has turned predatory due to the removal of standard bankruptcy protections, and other protections that exist for every other type of loan. He will see that if this lending system is to be fixed at all, it begins with the return of bankruptcy protections through the repeal of 11 USC 523(a)(8), and perhaps also the return of statutes of limitations to all student loan debt.
This post was originally published on The Hill and is republished here with the author’s permission.
Photo credit: Student Loan Justice.org/Alan Collinge