Yves here. While one can hope this student loan relief measure comes to pass, let us not kid ourselves. Notice the timing of the wavering by Biden, who has been involved with banks so long that it’s highly unlikely that his heart will ever be into debt cancellation, unless it’s heavily means-tested. But Biden or at least his economic advisers must recognized that Manchin tanking BBB in its current form, and in particular having said he would support a deal if the extension of the child care tax credit were out, will hit lower and middle income families promptly. One thing Biden can do quickly to restore some demand in the economy (recall both confidence and personal incomes were already falling before Omicron was stalking the land) even if not to the same people, is to keep the brakes on student loan payments.
So as much as progressives might like to see this shift as a concession to them, it’s just as easy to view it as a way to get more stimulus in the economy and get some credit for it too.
Originally published at Common Dreams
The Biden administration is reportedly considering another extension of the federal student loan payment pause that is set to end on February 1, a shift that comes as the White House is facing growing pressure from progressive lawmakers and grassroots advocates.
Politico‘s Michael Stratford reported Tuesday that the Education Department “says it may postpone” its plan to restart monthly student loan payments early in the new year.
Such a move would be a significant reversal for the administration, which called its August decision to delay the resumption of payments until February 1 “a final extension of the pause on student loan repayment, interest, and collections.”
The Education Department told Stratford that an announcement on the payment pause would come “later this week.” White House Press Secretary Jen Psaki said Tuesday that “the president has not made a decision yet.”
The Debt Collective, a group pushing for the cancellation of all outstanding federal student loan debt, tweeted in response that “an extension to the student loan pause means people can stay in their homes, put food on the table, save for retirement, take their medication or keep their business running.”
“An extension would be a good, popular decision. You should do it,” the group added, directing its post at President Joe Biden. “Then cancel student debt.”
Rep. Ayanna Pressley (D-Mass.) sent a similar message:
This is welcome news and would absolutely be the right call.
Extending the pause will help millions of borrowers and their families weather this ongoing pandemic.@POTUS must extend this critical lifeline & #CancelStudentDebt with the stroke of a pen. https://t.co/K5TFvcSzOu
— Ayanna Pressley (@AyannaPressley) December 21, 2021
Sen. Elizabeth Warren (D-Mass.) also weighed in on the subject Tuesday afternoon.
“Restarting student loan debt payments would take more than $85 billion dollars out of our economy next year,” Warren said in a tweet. “We’re still in a pandemic and people are still struggling. Biden shouldn’t restart payments and should use his authority to #CancelStudentDebt.”
With all due respect, @POTUS — you ran on a promise to cancel student loan debt.
Payments are set to resume in the New Year and our communities are not ready for this. $85 billion will be taken from people's pockets next year if you don't act.
Cancel. Student. Debt.
— Congresswoman Cori Bush (@RepCori) December 21, 2021
In recent days, White House officials have publicly indicated that there would not be another extension of the payment and interest pause. Psaki told reporters earlier this month that “a smooth transition back into repayment is a high priority for the administration.”
But amid the surging Omicron variant and continued economic disruptions stemming from the pandemic, progressives have argued that restarting student loan payments would be a colossal mistake, imposing an additional financial burden on millions of people and potentially damaging Democrats’ hopes of keeping control of Congress.
“This makes no sense,” Rep. Ro Khanna (D-Calif.) wrote on Twitter last week. “Instead of raising taxes on the ultra-rich, we are going to make students in debt pay to raise revenue. Awful on the substance and awful politics. We need to do better to deserve victory in 2022.”
The Roosevelt Institute estimated in a recent analysis that federal student loan borrowers were paying an average of $393 each month before the freeze was implemented in March of 2020.
“Covid cases are surging as Omicron rips through our communities. The pandemic is far from over, so the economic relief for it shouldn’t be either,” the Congressional Progressive Caucus tweeted Tuesday. “Extending the student loan pause would absolutely be the right move from the Biden administration—and then move on to canceling them.”
Cancel the payments – but the $$ will be paid instead by the gov’t on their student loan guarantees to the private bankers.
And, all those ‘receivables’ on the gov’t balance sheet will suddenly become write offs instead.
Wonder if the gov’t will still make the borrowers report the cancellation of the loan balance as income (1099-C) and make them pay their taxes on it? At least income taxes become dischargeable in BK 3 years after the return is filed.
The Federal government is Monetarily Sovereign. It cannot run short of its own sovereign currency, the U.S. dollar.
It neither needs nor uses dollars sent to the Treasury. Those M1 dollars immediately are destroyed — they no longer exist in any money supply measure — as soon as they hit the Treasury. (All federal tax dollars similarly are destroyed).
There never was a need for a student LOAN program. It always should have been a student SUPPORT program.
Putting students into debt always was an idea, originated by the rich to impoverish the rest and to force the working class to be desperate enough to accept crap jobs at crap wages.
We need educated young people. Why hamstring them with unnecessary debt?
To keep them humble and obedient and too afraid to ever join a protest against something.
So far it hasn’t entirely worked.
Christmas sales must be pretty weak for the administration to be floating this idea.
Polls. Biden belongs to the crew who expect Republicans to vote for them any day now, but he’s on the verge of becoming Obama in 2022 but with Trump, not Romney on the horizon and not enough Irish Catholic voters who will protect their guy in record numbers.
Harris turned him into a joke on what was supposed to be a PR restart.
He lied when he said he had the votes. Now Sinema is an Ecuador, so nothing can be done until next year, even the promise of it. He’s a joke. Trevor Noah was ragging on his travel ban.
All he did was whine about Manchin, another whiner. Did you know he had a phone call about someone using their child tax credit to buy drugs? They are both whining in public. A President who can’t deal with a guy like Manchin is going to panic. I suspect that is why Putin issued his ultimatum. He knows Biden will lash out looking for a win, like Obama after 2010.
There is no way the White House has executive orders ready to go. It’s a social club, not a work place. They have to start from scratch. Biden wanted congress to legislate because he doesn’t want to work, just live in his fancy house.
I still think that this in large part has to do with the dept if Ed and it’s servicers not having their act together to restart repayment.
If it ends up being a three month extension, it will be clear that it was just time to get the bookkeeping right.
And there you go, it’s May.
Does the sign on Biden’s desk read “The Buck stops over their”?
If it does, wouldn’t you expect that misspelling?
While this policy change is helpful (If it happens) it is too little and too late to change most people’s impression that JB is a tool.
My guess is that we will see President Harris take over next year after JB resigns for “Health Reasons”,most likely on the 4th of July.
I predict that Biden will resign after the D Party’s epic wipeout in the midterm elections.
OTOH, if things keep going the way they are, I think that Tom may be on to something.
Should we start a betting pool?
A bottle of two buck chuck says Biden stays for four years, barring a cardiac event. I think you and Tom presume the existence of some degree of self-awareness. I think the Democratic party is run by mindless corrupt zombies, lurching and staggering from one bag of money to the next. Hence the bet.
Not just the zombie nature of the party. But Biden has run for president 3 times. Like Hillary he’s convinced himself it’s his despite his record and pointlessness of his campaigns. He won’t let go.
And it’s not like Harris is going to get votes that Biden can’t. She’s Sarah Palin without the intellect.
And I will bet Jill has a say in the matter. No way is she giving way to Harris.
What dog lets go of its bone?
I agree strongly with this (and your other comments.) Biden doesn’t seem himself as having done anything wrong. He’s in his rightful place and that’s that. I fully expect him to run for re-election too.
” The ship always goes down with its captain!”
That would make Harris very happy. She would get to be President for two years. And then she thinks she will get 2 terms after that, so she can be a 10 year President.
Well, Biden was just a place-usurper to keep the rightful Sanders out of the campaign. And Harris will be in there to do the FIRE sector perpetrators an Obama Solid when they crash the Moneyconomy again but even more bigly. After that, she will be of no more use to them, so a way will be found to put roller skates under her Big Chair and ease her out the side exit.
And if another “Black” woman candidate ever runs for President, the ghost of Draculamala will lead millions to say . . . ” Been there, done that. Never again. Never Ever.”
This is terrible policy, its the road to perdition and wont fix the problem.
The real question is how to create policy to corral our predatory institutions of higher education and prevent them from crippling financially our best and brightest with the deadly double whammy of a degree not sought out by employers in our primarily private economy coupled with unaffordable tuition even if it was?
Here are some ideas:
First, you require institutions of higher education to issue their own student loan debt.
Second, you allow all student loan debt to be dischargeable in bankruptcy.
Third, you prevent institutions of higher education from packaging student loans and selling them to Wall Street.
Colleges and universities must be responsible for their own defaulted loans, and high levels of defaulted debt must charged against University endowments so that Boards of Trustees will demand accountability from the curriculum.
But I have no illusions, nothing will be done.
Next in line is forgiving mortgage payments to the people because “no one should have to live in fear of losing their home” said governor Newsom, so he is providing up to $80k for household in mortgage payments to struggling homeowners.
Cant make this stuff up.
This is imagine there is a can opener. Biden is President.
Brandon caves to the pressure – a little. A whopping three month extension. Whoop de [family blog]ing doo.
It shows that fear and pressure worked on this Admin on this problem. Perhaps it can work again. If not, perhaps it can be dialed up to terror and torture. Make the Joemala Administration delay Student FedLoans in 3 month increments until it is too close to election 2022 to dare demand repayment.
I don’t get the timing on the May 1st restart date. Why kick the can only that far to restart payments even closer to midterms?
Seems like Oct. 1st, would have been a better date. Team D could push some crappy student loan fix they know will never pass over the summer, blame its failure on Manchin and Team R, and then Biden could ride to the rescue right before early voting starts.
Just don’t see it unless Dept. of Ed said we need 90 days to get organized. But even then, I doubt that’s enough time to actually take over the processing and get organized.
Maybe the Democrats want to throw the next two elections to the Republicans really bigly; in the hope that the next great depression will happen when the Republicans are back in control of all Three Branches of Federal Government.
Then the Democrats will run on “not being Republicans”.
If the DemProg caucus doesn’t turn itself into an entirely different political party by then, they will go down with the garbage barge.
Done deal! I think what many people are overlooking is the trend -in
the face of a continuing disability of Congress to get things done,
nevermind the Loonytunes Supreme Court- the trend has been the
growing trend towards an Imperial Presidency. You can say that Trump
started it with, for example, all the ‘acting’ heads of agencies, Bear’s Ears,
etc. but I believe that this is something which is trending towards permanency. Of course there will be howls and echoes of ancient Rome
and Caesardom, but on the other hand, look how long Rome lasted
as an Empire.
Trump definitely did not start this trend towards an imperial presidency.
He took advantage of it but it was Obama, Bush, Clinton, etc. who all took their turns at governing by executive decree to lob missiles at pharmaceutical factories, start illegal invasions, murder US citizens, drone some folks. Some of warned decades ago that it was unacceptable and those who looked the other way when it happened would come to regret it when someone not Beltway approved had the same power.
Thank you for helping me make my point!
Actually some date that to Nixon.
Those of us who were around in the 70’s remember the phrase “Imperial Presidency”. And it was associated with Nixon back in the day.
And Nixon had those cool Secret Service/Imperial Guard uniforms that would have had Il Duce feeling like a piker.
I’m sure universities don’t like this idea because if student debt needs to be forgiven then this will acknowledge that university fees have become unreasonably high, and too frequently create an unmanageable burden which cannot be repaid. These university fees have mostly ballooned because they are financed by federally guaranteed student loans, which make no evaluation of a students ability to repay, and as a consequence can lead to a university mispricing the cost of its services.
Forgiving some portion of past student debt is a good start to helping currently indebted students. But if nothing is done to manage university fees, then future student debt will just end up with the same problems. So canceling student debt is not just a question of past debts, but also managing the future cost of a university education. And that is a very difficult conversation to have.
In the case of State Public Universities, they have also ballooned ever since the Great Tax Revolt when various state publics elected various state legislatures to boycott their various state universities and stop funding them.
Without state funding the state universities had nowhere to go but students themselves, and raise tuition, fees, housing, meal plan costs, etc.
Also, some universities developed a case of Malignant Administrationoma which keeps diverting more university money to the growing mass of malignant Administrationoma cancer cells.
“So canceling student debt is not just a question of past debts, but also managing the future cost of a university education. And that is a very difficult conversation to have.”
Truer words were never said. That conversation will only take place only after the revolution–or the societal collapse– that displaces the PMC. Take your pick. There will be no progress with these spoiled yahoos in charge.
If that revolution does not extend to stateloads of state citizens being willing to pay higher taxes again in order to support state universities again in exchange for low tuition again, then there will be no progress on the university costs and expenses front no matter which “new boss” revolutionizes the “old boss” out of the boss’s chair.
Lol. That would be fantastic if your scenerio of increasing taxes to pay for higher education played out. It would put universities and colleges in direct competition with the military budget. Americans might finally give a sh*t how much of their tax money goes to “defense”.
Perhaps the proper solution would be a return to the methods of the 19th Century. Where college was a conceit of the wealthy. Those who could afford university attended. Those who could not afford such would find productive options elsewhere.
OTJ training was expected of industry. The 99 per cent took advantage of such apprenticeships to become productive members of society.
University is not truly required for most productive endeavors in the 21st century. The question is, ” Can we find our way back to the older methods” which worked well in tmes past?
A precondition for re-animating the older methods would be to recreate the older conditions. The key older condition that would have to be recreated first would be a Big Beautiful Wall of Militant Rigid Belligerent Protectionism around the American political economy, behind which we could be safe enough from product dumping aggression by all our trading enemies to where we could even dare to experiment with restoring older methods or trying new better methods or some of both.
No Protectionism? No hope. No hope of anything.
Our knowledge of banking has been going backwards since 1856.
Credit creation theory -> fractional reserve theory -> financial intermediation theory
“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner
When you are familiar with all three theories it is easy to tell which one they are using.
Milton Freidman used “fractional reserve theory” and this was why monetarism didn’t work.
You can’t control bank lending with central bank reserves.
They then started using “financial intermediation theory”, which is also wrong.
Ben Bernake used this in his study of the Great Depression, so there was no way he could understand the debt deflation of the Great Depression.
Debt deflation can’t happen if banks are financial intermediaries.
They don’t know how banks really work, so they can’t see the problem with debt.
This is why they left the debt in place after 2008.
Japan discovered how to avoid a Great Depression and deliver Japanification instead.
Save the banks and leave the debt in place.
Their economy has flat-lined for thirty years as they repay the debt they ran up in the 1980s.
We need to know how banks really work to see why leaving the debt in place after a financial crisis is so bad for the economy.
Private banks create the money supply
Money and debt come into existence together and disappear together like matter and anti-matter.
Bank loans create money and debt repayments to banks destroy money.
Bank loans create 97% of the money supply
The money supply ≈ public debt + private debt
Money and debt are like opposite sides of the same coin.
The debt repayments to banks destroy money and push the economy towards debt deflation, i.e. a shrinking money supply.
Moreover, kiddies can’t vote, but adult debtors can.
The only reason to demand repayment of Federal student loans is to create revenue for the Fed Gov. These same politicians apparently didn’t see a need for Fed revenue when they eliminated taxes on the wealthy in the previous Infrastructure bill. Oligarchy is very predictable. These same politicians will likely keystroke $trillions to Hospital CEOs in 2022.