Nobody Asked Me But… (August 31, 2022)


By DR. LARRY MOSES

No one asked me but… Like many other Americans, I am confused by President Biden’s royal decree that he, and I mean he, will forgive $10,000 in college loans and $20,000 in student debt acquired under the Pell Grant program. For some reason, in my thirty years of teaching, I felt that Pell Grants were exactly that, grants that didn’t have to be repaid.

So I did what you would expect, went to my trusty computer, opened GOOGLE and typed in “explain Pell Grants”. I was greeted with a message that many other people had done the same. A myriad of sources discussing Pell grants popped up on my screen. I read a number of them and all of them seemed to confirm that Pell Grants were not loans and did not require repayment.

If this is true, and I have found enough sources that have said so, one has to wonder why King Biden made this statement just before the November election. One must ask where does the President’s power come from to cancel a debt that does not exist?

Allow me to suggest that this royal decree will be challenged in court. Who will lead the challenge? Republicans, of course.

Democrats will then have a problem with a large segment of the population that has college debt, not from Pell Grants, but from other loan programs that require repayment.

Apparently, there are a number of federal loan programs that must be repaid. These include, but are not limited to, Perkins Loan, Direct Stafford Loans, Direct PLUS Loans, and Health Professions Program Loans. These are all loans, not grants, and must be repaid. President Biden would unilaterally waive payment of these loans up to a total of $10,000 per person. Keep in mind that not all college loans acquired outside of the government have been forgiven. I have listed below a number of facts and figures that I have come across in my search for college debt in America. These are not my facts, but a collection of facts that you too can find online.

According to the Federal Reserve Bank of St. Louis, as of August 2022, student loans in the United States collectively total nearly $1.75 trillion. This includes federal and private student loans.

About sixteen percent of this debt is private debt, which will not be affected by the presidential decree. A White House spokesman said the president plans to wipe out the balances of as many as twenty million borrowers and cut the rest by as much as $20,000. While I have to repeat it, since the $20,000 discount is for Pell Grants, which do not have to be repaid, I don’t understand how this will help with college debt reduction.

The Institute for College Access & Success, a nonprofit organization that works to improve access to and affordability of higher education, reports that 62% of the class of 2019 graduated with a student debt. According to the most recent data available from these graduates, the average student debt was $28,950. It’s not even a car payment. According to NerdWallet’s 2021 Household Debt Study, the average US household with student debt owes about $58,957.

Here’s what the average student loan debt looks like by type: Average bachelor’s degree debt of $28,950. Graduate student loan debt of $71,000, law school debt of $145,000, medical school debt of $201,490, dental school debt of $292,169, school of dentistry debt of pharmacy of $179,514. There are three categories of nursing school debt: associate degree $19,928, bachelor of science in nursing $23,711, and master of science in nursing $47,321. The vet school’s debt is $183,302.

According to a January 2022 census analysis, 45 million Americans have student loan debt. Federal data shows that 25 to 34 year olds are most likely to have student loan debt. But the largest amount is owed by those thirty-five to forty-nine.

According to 2020 data released by the American Association of University Women, women generally borrow more for college than men (and earn more degrees). According to federal data, students of African descent, when compared in percentage with other races and ethnicities, borrow more often and for larger amounts to help them acquire a college education.

MeasureOne, a college data company, reports that as of July 2021, approximately 92% of college debt is held by the US Department of Education. The total outstanding federal student loan debt is $1.62 trillion.

They also said that private student loans make up about 8% of total US student loans outstanding. Total outstanding private student loan debt is approximately $131 billion.
Parents also have a federal student loan program to help pay for their children’s education: Parent PLUS. Parent PLUS’s total debt is approximately $107 billion. The total number of Parent PLUS borrowers is approximately 3.6 million. The average Parent PLUS loan debt is $29,805.

The National Center for Education Statistics reported that a 2022 high school graduate could expect to borrow $39,500 for their bachelor’s degree. About 45% of high school graduates are expected to enroll in college. Among these students, about 42% would have to go into debt over an average of five years to obtain a bachelor’s degree.

All of that said, one has to wonder about the fairness of debt cancellation for those who struggled in school and paid their way? How fair is debt cancellation compared to those who, after graduating, repaid their loans? How about those families who paid for the trip without taking out a loan by sacrificing the vacation, the new car, the best house, etc. ?

Since everyone expects this Royal Decree to be challenged in court, where it will likely be overturned, one must assume that this was simply a political decision to be given to the Democratic Party; who has little to hang his hat on; boost to the November elections.

However, I remember President Calvin Coolidge’s reaction to a call for cancellation of Allied World War I debts. “Money borrowed, even if it is owed to a nation…, must be repaid. They committed the money, didn’t they? Let them pay.

Thought of the week… If you borrow money, borrow it from a pessimist because he doesn’t expect you to pay it back anyway.

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