One plank of 2020 Democratic presidential front-runner Bernie Sanders’ $60-trillion plan to radical break America is to pay off most or all current student debt, estimated to be between $1.5-$1.6 trillion, according to recent figures.
But according to a recent survey, the plan is opposed by about 57 percent of Americans and, as The Wall Street Journal noted, those most opposed are voters Sanders most wants to peel away from supporting President Donald Trump:
Bernie Sanders’s plan to wipe out Americans’ $1.6 trillion in student debt could face thorny political and practical problems if he is elected president in November.
The Vermont senator, an Independent who has surged to the top of the national polls in the Democratic presidential primary, has drawn little congressional support for his plan. A bill he introduced with Rep. Ilhan Omar (D., Minn.) last summer has just a dozen co-sponsors, all in the Democratic-controlled House, where it has languished.
A majority of Americans, 57%, oppose canceling all student debt, according to a September 2019 Wall Street Journal/NBC News poll. Among the strongest opponents are groups Democrats hope to peel away from President Trump: Rust Belt voters, independents, whites, men and voters in rural areas.
The WSJ went onto note that about 43 million Americans currently have student loan debt, “which has quadrupled since 2005 and is now the second-highest form of household debt, after mortgages, according to the Federal Reserve Bank of New York.”
Why is that? How did Americans become so mired in school debt in the first place? We can thank the Garbage Party for it.
One reader to The Morning Call explained it succinctly and correctly in a letter to the publication in October:
It’s true the college costs have skyrocketed, making it almost impossible to work one’s way through most colleges today. Dominant among the reasons for this was passage of the Higher Education Act of 1965 during the Johnson Administration, providing for federal funding to guarantee student loans.
Not surprisingly, this act and follow-on legislation begot the doomsday cycle of loans being too easily available, most colleges abandoning prudent spending practices, tuition costs exploding and accelerating demand for even more student loan dollars.
Another example of a well-meaning Democratic policy with unintended consequences, ironically now accompanied by self-righteous Democrats who want someone else to clean up the mess.
In November, MarketWatch observed, prophetically, that during an upcoming Democratic debate the party’s 2020 contenders would certainly bring up student loan forgiveness but avoid the fact that their party — the party of bigger government — is responsible for creating the cycle of student loan debt, as the Morning Call reader explained:
Student debt totaled $345 billion only 15 years ago. Today, the total is $1.6 trillion, a staggering 464% jump. The average borrower today graduates nearly $40,000 in debt. This contributes to more loan defaults, slowing small-business startups and lower home-ownership rates.
So, yes, we’ve reached crisis proportions. Now, let’s put this issue in perspective.
Sanders likes to claim that student debt is up because state and federal governments ‘cut education spending.’ That’s demonstrably not true, especially given the fact that the vast majority of student loans come from the federal government. Yes, the government does not give the money away to students, but that would be an irresponsible use of taxpayer money. Plus, for the millions of Americans who do pay back their loans, the government makes some interest money.
“It took 42 years — 1965 until 2007 — for the student loan balance to grow to $500 billion,” Education Secretary Betsy DeVos noted last fall. “It took only six years for the loan balance to double — to $1 trillion — in 2013. That’s one-seventh the amount of time it took to get to $500 billion. And today, only five years later, FSA holds nearly $1.5 trillion in outstanding loans.”
Back in 1987, President Reagan’s Education secretary, William Bennett, offered his “Bennett Hypothesis” on why college tuition rates were going to skyrocket (as they have). It’s simple economics and, yes, capitalism, which Democrats claim to hate.
“Increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase,” he proffered. Three decades later, this ‘hypothesis’ has been proven in spades.
“Higher tuition costs raise loan demand, but loan supply … [relaxes] students’ funding constraints,” the bank said, asserting that there is a “pass-through effect on tuition,” the Federal Reserve Bank of New York reported in 2015.
MarketWatch explained: “This means that for every dollar a college or university gets in subsidized federal loans, tuition increases 65 cents. The outcome is similar for unsubsidized loans (30 cents) and Pell Grants (55 cents).”
Plus, from 1976 to 2005, Congress made student debt virtually impossible to include in bankruptcy, making it the only kind of consumer debt that can almost never be discharged. Historically, loans were high-interest and more difficult to get because they could be discharged, and most loans were private. Thus, lenders took on greater risk when they offered loans and were more cautious. Absent risk to the lender, loan-giving increases.