New CBO Report Shows Student Loan Debt Repayment Is a Sham

We do not need Biden/Harris to cancel student debt.  Historically, the students did not repay the debts—and no penalty.  In fact, prior to Biden at best only 45% repaid the student debt.

“The Congressional Budget Office (CBO) “examined a sample of federal student loans that entered repayment between July 2009 and June 2013 to measure the extent borrowers were making progress on repaying their debt,” reports the Wall Street Journal.

They found that during the first six years, more than half of student loan borrowers who were supposed to begin making payments were only making payments 45% of the time. The borrowers weren’t making any payments for most of the time because they were either in default, forbearance or deferment. 

Incredibly, “borrowers made payments greater than $10 in only 38 percent of the months.” Borrowers were making payments inconsistently and only in token amounts.”

If the government was a bank, it would go bankrupt not having loans repaid.  This has been a fraud from the beginning.  Let us get real—end government involvement in loans.  If you take a loan, you repay it.  Do not expect your neighbors to pay for your responsibilities.

New CBO Report Shows Student Loan Debt Repayment Is a Sham

Rick Moran, PJ Media,  9/14/24   https://pjmedia.com/rick-moran/2024/09/14/new-cbo-report-shows-how-student-loan-debt-repayment-is-already-a-sham-n4932515#google_vignette

We’re told that we need to forgive every dollar of the $1.74 trillion in student loan debt because young people are being crushed under a mountain of bad loans. How were they supposed to know that majoring in Environmental Activism wouldn’t allow them to earn enough money to pay back their loan?

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That said, young people are so overburdened in college loan debt that they can’t buy a house, or start a family, or even move out of their parent’s home.

That’s been the narrative advanced by Joe Biden, Bernie Sanders, Elizabeth Warren and every other advocate to make student loan debt disappear. The only problem is that it’s a load of crap.

The Congressional Budget Office (CBO) “examined a sample of federal student loans that entered repayment between July 2009 and June 2013 to measure the extent borrowers were making progress on repaying their debt,” reports the Wall Street Journal.

They found that during the first six years, more than half of student loan borrowers who were supposed to begin making payments were only making payments 45% of the time. The borrowers weren’t making any payments for most of the time because they were either in default, forbearance or deferment. 

Incredibly, “borrowers made payments greater than $10 in only 38 percent of the months.” Borrowers were making payments inconsistently and only in token amounts.

One reason is that the Democrats’ 2010 income-based repayment plans capped payments at 10% of discretionary income—i.e., income exceeding 150% of the poverty line—and canceled debt after 10 to 20 years. As a result, many borrowers had negligible required payments. But then their loan balances ballooned as they accrued interest.

After six years in repayment, the typical borrower owed 8% more than his beginning balance. A quarter of borrowers owed 30% or more debt. More than 75% of those in income-driven repayment plans had rising balances. Borrowers in such plans made payments of more than $10 a month in only about a third of the months.

Democrats say that the student loan debt crisis is the result of greedy, “for-profit” colleges that lure students in with unpayable loans. In fact, after six years, “the typical borrower who attended a nonprofit or four-year public college had paid down only 1% or 2% of his starting balance.”

At every turn, the Democrats and Joe Biden have been lying about student loan debt. The loan forgiveness would mostly benefit upper-income people, especially doctors and lawyers who took out huge loans to attend graduate school. Since few borrowers are bothering to pay much of it back, the reason they’re not buying houses or starting families has little or nothing to do with their “debt burden.”

Certainly, some borrowers are conscientious and have been trying to pay back what they owe. There are now several federal programs that make it possible for them to discharge their debt with minimum repayment. The wisdom of these programs can be questioned. They present a “moral hazard” because these programs favor those who took out loans to go to college and refuse/can’t pay them back while millions more Americans either paid back their loans in full or never went to college in the first place.

We don’t talk about moral hazards anymore. It’s one of those things that kinda slipped through the cracks. But this is going to happen again. Student loan debt will eventually be wiped out and the whole process of handing out taxpayer-guaranteed loans will begin all over again.

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If the definition of crazy is “doing the same thing over and over and expecting a different result,” then we’re trapped in a causality loop where we’re condemned to repeat our mistakes over and over for all eternity.

Or until taxpayer money runs out.