Big Bite: A Timeline | Student Loan Debt Forgiveness
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Big Bite: A Timeline | Student Loan Debt Forgiveness
Big bite | A detailed dive into big news
On March 30, 2010, Obama signed the Healthcare and Education Reconciliation Act of 2010.
The act overhauled the student lending program, ending the program that subsidizes banks and other federal institutions for issuing loans. Instead of federalizing the student loan program and allowing students to borrow directly from the federal government.
Before Obama entered office, student loans did not qualify for almost every standard consumer protection (like bankruptcy and statute limitations); student loans had caused a hyper-inflationary market and a systemically predatory lending system.
Obama's administration did nothing to curb the predatory collection of the student lending system and still did not allow for bankruptcy.
Although the 2010 legislation provided forgiveness after 20 years, if borrowers keep up with their income-driven repayments over time, history brings into question the effectiveness of this policy. The National Consumer Law Center reported in March 2021 that only 32 borrowers have successfully canceled their loans under a similar 1995 debt cancelation legislation, even though about 2 million borrowers have been in repayment for 20 years or longer.
When Obama left office, the average undergraduate debt was $35,000, up from about $17,000 when Obama announced it. Today the average undergraduate student loan debt is over $35,000 and graduate student loans are $100,000, according to EducationData.org.
Why such a drastic increase? Because colleges and universities increased their tuition, knowing that students would take out loans backed by the federal government, guaranteeing repayment regardless of how much they increased tuition.
Biden supported the Health Care and Education Reconciliation Act of 2010, and Jill Biden was at the signing and provided remarks touting the bill.
This bill passed the Senate along party lines; not a single Republican voted for this bill.
Biden's solution to the ramifications of legislation passed while he was Vice President? Is it to fix the root of the problem, the universities and the federal student loan programs? No.
Instead, he institutes a $10,000 debt forgiveness program by bypassing the legislative process, which could cost $300 billion or an average of $2000 per taxpayer.
Sources:
Obama's student loan policy is costing twice as much as expected, CNN Money
President Obama’s horrible, terrible legacy on student loans, The Hill
Obama Signs Student Loan Overhaul Legislation, ABC News
Only 32 student-loan borrowers ever have qualified for full debt forgiveness under income-driven repayment. Here are 3 ways advocates say Biden could change that, Business Insider
20 U.S. Code § 1098e - Income-based repayment
H.R. 4872 (111th): Health Care and Education Reconciliation Act of 2010