Guest Post by Martin Armstrong
The student loan forgiveness plan backfired plain and simple. Payments were frozen three years ago in March 2020 under the CARES Act when countless people were out of work and the program made sense. Then Biden campaigned on a promise to eliminate a portion of that debt with no real plan in place. One must wonder if he thought his lofty promise to buy votes was even a possibility. The Education Department announced that debtors must resume payments by October, and interest on those loans will resume in September. This will affect 44 million Americans.
The country is dependent on consumer spending for a third of GDP, and the average American’s disposable income is dwindling amid the overall increased cost of living and taxation to fund reckless government spending. The one-issue voters who backed the Dems for this reason may want to reconsider their choice come November.
The National Bureau of Economic Research (NBER) conducted a study that found the promise of forgiving debts actually created a worse financial situation for many Americans. Household leverage rose 3% during this pause as borrowers increased their private debts. “Comparing borrowers whose loans were frozen with borrowers whose loans were not frozen due to differences in whether the government owned the loans, we show that borrowers used the new liquidity to increase borrowing on credit cards, mortgages, and auto loans rather than avoid delinquencies,” the study found.
So the study found that these people were more likely to accumulate credit card debt, which is at an all-time high. They also found that these individuals were more likely to direct the funds for mortgages and auto loans, which may be at an all-time high for this particular generation of younger adults.
Countless people truly believed their federal student loan payments would vanish in thin air. It is hard to blame them as the president repeatedly promised he had the power to make this happen. Some who left school in 2020 have never made a student loan payment or factored that cost into their monthly expenses. Over 7.5 million borrowers have already defaulted on their student loans. There will be a major issue here once these borrowers see their monthly expenses rise by a few hundred dollars.
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Takes one back to reports a few years ago of students using their loan money for spring break trips to sunny beaches. With that mindset and a bought for president, what could go wrong with the next step in the rape of the taxpayer?
No shit Sherlocks.
Next to study, Standing in the rain possibly gets you wet.
Yep, this caught my attention as well, trying to help people who won’t help themselves only makes the situation worse. Us tax payers slaves have to pay for this stupidity.
No they don’t.
.gov conjures ‘money’ out of thin air.
You pay taxes to remind you of who is in charge…
The creation of money out of thin air is itself a form of taxation. The increase in the money supply cheapens the the dollars in your pocket.
These stupid children should have spent their loan money on civics courses, so they could have learned that just because the President is a retarded Communist, doesn’t make him Santa Claus.
The only lesson they’ll learn is that the democrats would have canceled their student loans but the evil republicans didn’t let them.
Except he kinda is, how else did so many trillions get spent in the plandic? Congress never batted an eye
Take the fucking money out of these overpriced left-wing communist college and university endowment funds. They have billions and billions.
This Happy Horsesh** of pushing everyone’s financial stupidity onto the taxpayers has to stop.
Getting kids into college who have little to no chance of academic success and no understanding of economics is insanity. These colleges get their money, kids acquire debt, and end up marginally employable with either no degree or a useless degree.
“Over 7.5 million borrowers have already defaulted on their student loans. There will be a major issue here once these borrowers see their monthly expenses rise by a few hundred dollars.”
Student loan defaults are a two edged sword: the borrower faces credit score penalties which will impact their future ability to get even deeper in debt and could hinder employment opportunities due to a poor credit score and the institution could be negatively impacted if too many of their students default on their loans thereby putting the institution in jeopardy of losing access to federal student aid funds. https://www.usnews.com/education/blogs/student-loan-ranger/articles/why-you-should-look-at-a-colleges-student-loan-default-rate
We live in a debt based society where the economy is propped up by excessive debt: consumer, state, local, federal government and corporate debt. This is unsustainable, it cannot go on forever. The overlords know this so they are pushing for their Great Reset to reconfigure the global system to keep themselves at the top, totally in charge and push us deeper into peonage, serfdom and depravity.
Some years ago I was actually going to go to a community college near me. Had to go through 4 administrators and hours of waiting. I was in my late 50’s and had a B.S. from a university. I sent them my transcripts from that university. The last administrator then told me they needed my HS transcripts! What a CF that CC was. It was more of a jobs program for administrators. Anyway, when I inquired about financial assistance they told me their students were ineligible for any kind of financial assistance because so many took the money and ran. I bailed as I wasn’t going to finance their lazy arses.
The biggest mystery is why a Free Shit Party hasn’t won every election since forever. Democracy without an honorable, disciplined people is fatally flawed.
And the banksters continue to win and win and win and win…
No one forced students to take on this debt.
Students:
You signed for the loan.
No one forced you.
Pay it back , or live life as a dishonorable person who welches on their word.
All this student loan debacle really suggests to me is, the age of accountability should be raised to 25-30.
Here’s a wonderful story of corruption from my home State.
Corruption, corruption. We don’t need no stinking corruption.
Skin in the game !
I covered 90% of my daughters college and she took the minimum loans available to cover that 10% . After a grueling college study program to earn a BSN/RN degree , now reaping the benefits !
Graduated in May 2018 passed state license exam in July and was on the floor of a world famous hospital in August . All loans paid off in 3 years and now in 2023 she is charge nurse and is doing well .
The advice I gave her was to be the one with a $5 thousand dollar car and $100 thousand in the bank !
She just bought a 2019 cream puff car loaded and owes the party bunch she knew in college in the dust NOTHING !
As for those who got bad advice from what ever source life’s lessons are hard and you must endure the consequences !
To think that anyone in government gives a shit about you and your debt dilemma WAKE THE FUCK UP !
You are on your own as an adult in this world time to act like it !
The worst part was how all those “one issue voters” showed up to vote at 3AM. Unlike those old one issue voters sitting alone at the bar mumbling something about “you can keep your doctor” over and over, who voted early by mail. Twice. Who needs a doctor when you can get triple vaxxed to stay safe. All for Free!
Could be worse. They could be the “weapons of mass destruction” guys with no legs having their toxic masculinity counseled out of them by that feminist democrat lesbian VA social worker with a credential from directional Staterape U who will retire with a full pension – and already had their loans forgiven.
Here’s an interesting historical sidenote personally experienced during the 1977-1981 time frame. Many college friends who had no need for student loans took them to the max anyway. But not for credit card debt or sunny spring break trips. We/they trotted quickly to a bank and got CDs at 14-16% (the loans were something like 4-5%). Rolled the CDs for some years pocketing the difference. To my knowledge everyone paid back the government money that had been so thoughtfully provided. Immoral? maybe, but I still prefer to call it alert arbitrage. No such opportunity exists today now that the student loan programs are dedicated to graduate enslavement.
It is simply silly to think that inflation will affect GDP in any way whatsoever. People are economic units. Corporations are economic consumers. People spend what money they have. If they spend it on loans, or food, or medical care, or xbox games, it is irrelevant. The money goes to corporations. So everything is even.
Inflation cannot possible affect this. People spend their money. If they spend $2.50 on eggs, then the corporations get $2.50. The economic unit will then spend $2.50 elsewhere. But if Eggs are $5.00, then the corporation gets $5.00. This creates efficiency, in that the economic unit (the people) can spend their money with less “drag,” (i.e. all at once), and not waste energy in travel time, or related ‘costs’ associated with spending. So the economic unit spends its dollars more efficiently, and the corporation consumes dollars more efficiently.
And GDP remains the same, but with the added benefit of less economic ‘drag.’ This iron law of economics applies to eggs, used cars, fake moon landings, Hunter’s under-aged dates, buying Trump posters, and WEF non-ownership society plans. The faster, and the more cumulatively focused, the economic units (the people) turn over their money to the economic consumers (corporations), the more efficiencies are created and the better off the society will be both as a whole and at the level of economic consumers. Everybody win/s.
I recall some articles about 5 years ago talking about student loan repayment statistics … at that time, at 7 years after graduation, something like 50% of the students hadn’t paid back even ONE DOLLAR of the principle on their loans … NOT — ONE — DOLLAR … after 7 years …
Obviously they never intended to pay back their loans … as is the case with many of today’s ‘students’ …