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My student loan horror story shows Biden is making a grave mistake

If Biden is serious about making tens of millions of people go back to paying this amount, Democrats will suffer historic losses in November — and they’ll deserve it

Carl Gibson
New York
Tuesday 14 December 2021 20:46
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The Biden administration’s recent announcement that student debt payments will restart in February of 2022 is a slap in the face to the approximately 43 million student debtors across America, each of whom owe an average of $37,000. If President Biden is serious about making tens of millions of people go back to paying a significant portion of their monthly incomes to shady loan servicers who have been sued by multiple state attorneys general for predatory business practices – and doing so as the Omicron variant continues to spread, and as costs for basic needs like food and housing are already at a 39-year-high – Democrats will suffer historic losses in November. And they will deserve it.

In 2017, back when I was co-publisher of a moderately successful online media company and had the money to spare, I took approximately $70,000 out of my savings in cashier’s checks to send to student loan servicer Navient (the original loan principal was approximately $30,000). I painstakingly included the loan number of each separate loan in the memo portion of each cashier’s check, and wrote the checks out in the exact amount owed for each loan as of that morning. Then, I sent the checks to Navient via certified mail, meaning Navient had to sign for them to confirm receipt.

Navient indeed signed for the checks. But rather than credit the account, Navient misapplied the funds to keep the balances active, which kept the accounts open, which meant Navient could continue tacking on inexplicable fees, and additional interest on those fees. Essentially, Navient stole $70,000 from me. Attorneys have told me I have cause to sue, but attorneys require retainers, and Navient stole my money. So, needless to say, I’m not giving Navient – nor Maximus, which recently acquired Navient’s student loan portfolio – one more dime. This debt will continue to be an issue for the foreseeable future. Unlike auto loan debt or credit card debt, most student loan debt cannot be discharged through bankruptcy.

More than 90 percent of the approximately $1.75 trillion in outstanding student loan debt is federally owned (around $1.59 trillion). And the Higher Education Act of 1965 grants the US Secretary of Education full authority to write down, release, or waive any right, claim, lien, or title associated with federal student loans. This means Biden doesn’t need to wait on Congress to send him a bill — according to the Higher Education Act, he could abolish all federal student debt with a flick of a pen.

In April, Biden authorized the Department of Education to conduct a legal review of the president’s authority to unilaterally cancel student debt, which White House of Chief of Staff Ron Klain said would take “weeks.” Six months later, Congresswoman Ilhan Omar (D-Minnesota) called on the Biden administration to release the memo to the public. When The Debt Collective, a student debtors’ union, eventually filed a Freedom of Information Act request for the memo, the document they received was very heavily redacted. Even though the memo was dated April 5, Biden has not acknowledged that the review has been completed, let alone shared the results with the public.

President Biden has already used his executive powers to forgive federal student debt, proving that it is well within his authority. Earlier this year, the Department of Education authorized $6.5 billion in loan forgiveness for borrowers with permanent disabilities. Borrowers who were defrauded by for-profit colleges also had their student debt erased, along with Americans who applied for relief through the Public Service Loan Forgiveness program (eligible to borrowers who worked for 10 years in the public and nonprofit sectors). While beneficial, those initiatives were limited to a very specific subset of borrowers, and the amount forgiven was a drop in the bucket compared to the $1.59 trillion in outstanding federal loan debt.

On the campaign trail, Biden pushed for forgiveness of at least $10,000 in student debt per borrower, though he has yet to follow through on abolishing even that paltry amount. Senator Elizabeth Warren (D-Massachusetts) has been a leading proponent of cancelling up to $50,000 in student loan debt per borrower, which she argues would “provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families.” Her arguments are sound: A 2018 study from Bard College’s Levy Institute of Economics found that cancelling all federal student debt would not only boost GDP by as much as $108 billion per year, but would create 1.2 to 1.5 million new jobs every year in the years immediately following debt cancellation.

But if President Biden does resume student loan payments in February of 2022, it will put a valuable arrow in the quiver of Republicans hoping to unseat Democrats in the midterms: All they have to do is point out the fact that, when they were in power, student loan payments were put on pause, and Democrats were the ones to turn them back on.

When he delivered his victory speech in November of 2020 from downtown Wilmington, Delaware, Biden was just steps away from Navient’s headquarters, and one highway exit away from Sallie Mae’s headquarters. For decades, Biden was the Senator from Delaware, and loan servicers like Navient and Sallie Mae were his constituents. But now, as president of the United States, Biden represents an entire nation of 330 million people, rather than the 973,000 residents of Delaware. We are his constituents now, not the loan servicers.

Democrats’ immediate political future, as well as democracy itself, may very well hinge on whether or not Biden chooses to represent the interests of a handful of greedy loan servicers, or the interests of 43 million American student debtors who have been stretched to breaking point by the pandemic. Student borrowers need relief, not punishment. And Biden has the power to make that happen.

Carl Gibson is a freelance journalist and columnist. Follow him on Twitter @crgibs.

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