SUPREME COURT TAKES A HUGE DUMP ON AMERICANS WITH STUDENT DEBT
The recent Supreme Court ruling on student debt relief has left many Americans feeling like they just failed a pop quiz they didn't even study for. The fallout from this decision has been nothing short of hilarious, if not downright depressing.
First, let's talk about the student debt crisis. It's like a horror movie where the monster is a giant pile of money with interest rates that keep growing. Millions of people are struggling to repay their loans, and the total amount owed is over $1.7 trillion. That's enough money to buy a small island nation or at least a really nice yacht.
So, how did we get here? Well, it's a complicated story involving rising tuition costs, declining state funding, lack of financial aid, predatory for-profit colleges, and an inefficient federal loan system. It's like a game of Jenga where every block is a different problem, and if you pull out the wrong one, the whole tower collapses.
Who supported decreasing state contributions to colleges? Probably the same people who think pineapple belongs on pizza or that socks with sandals are a fashion statement. It's hard to say for sure, but it seems like states that had fiscal crises, lower tax revenues, and more conservative tax policies tended to cut higher education funding more than others. It's like they forgot that investing in education is the key to a prosperous future.
Now, let's talk about the recent Supreme Court ruling. It's like getting a detention for something you didn't even do. President Biden's plan to cancel up to $50,000 of federal student debt for certain borrowers was struck down because apparently, he didn't have the legal authority to do so. It's like the Supreme Court is saying, "Sorry, we can't help you with your crippling debt, but we can give you a participation trophy for trying."
The impact of this ruling on students is uncertain. Will Congress pass any legislation to reform the student loan system or provide more funding for higher education? Will states step up and offer more financial aid and grant programs? Will colleges and universities lower their tuition and fees? Who knows? It's like trying to predict the weather in a world where climate change is real and unpredictable.
The effect of this ruling on the US economy is also unclear. Will student debt continue to weigh on borrowers' financial situations and decisions? Will it affect their mental health and well-being? Will it influence their civic and social engagement? Will it widen the gaps between different groups based on race, gender, class, geography, and other factors? It's like trying to solve a Rubik's Cube blindfolded.
In conclusion, the student debt crisis is like a bad joke that keeps getting worse. It requires a comprehensive and coordinated approach from various stakeholders, but it also requires a sense of humor. After all, laughter is the best medicine, unless you're laughing so hard you forget about your student loans. But, now onward to the Deft Dive.
Opinion | The Supreme Court Is Harming the Economy by Cancelling Student Debt Relief | Common Dreams https://www.commondreams.org/opinion/the-supreme-court-is-harming-the-economy-by-cancelling-student-debt-relief
THE DEFT DIVE
What is the student debt crisis?
The student debt crisis refers to the situation where millions of Americans are struggling to repay their student loans, which have reached a total of more than $1.7 trillion. According to the Federal Reserve, about 43 million borrowers owe an average of $39,000 each. Student debt can have negative impacts on borrowers' financial well-being, mental health, career choices, homeownership, family formation and retirement savings.
What caused it?
There is no single cause of the student debt crisis, but some of the factors that contributed to it include:
- - The rising cost of college tuition and fees, which outpaced inflation and income growth for decades. According to the College Board, the average published tuition and fees for in-state students at public four-year institutions increased by 212% from 1988 to 2018, after adjusting for inflation.
- - The decline in state funding for public higher education, which shifted more of the cost burden to students and families. According to the Center on Budget and Policy Priorities, state spending on higher education nationwide fell $1,448 per student, or 16 percent, after adjusting for inflation, between 2008 and 2018⁷. Per-student funding rose in only five states: Indiana, Montana, Nebraska, North Dakota, and Wyoming. Eighteen states cut funding per student by more than 20 percent, and in eight of those states the cut exceeded 30 percent⁷.
- - The lack of adequate financial aid and grant programs for low- and middle-income students, especially those from underrepresented groups. According to the Institute for College Access and Success, Pell Grants — the main federal grant program for low-income students — covered only 29% of the average cost of attendance at public four-year colleges in 2019-20, down from 79% in 1975-76.
- - The proliferation of predatory for-profit colleges that target vulnerable students with low-quality programs, high fees and deceptive marketing practices. According to the National Center for Education Statistics, for-profit colleges enrolled about 10% of all undergraduate students in 2018-19, but accounted for about 22% of all federal student loans and 34% of all loan defaults.
- - The complexity and inefficiency of the federal student loan system, which offers multiple repayment plans, forgiveness programs and servicers, but often fails to provide clear information, guidance and oversight to borrowers. According to the Government Accountability Office, about 2 million borrowers who were eligible for income-driven repayment plans — which cap monthly payments based on income and family size — did not enroll in them as of September 2017.
Who supported decreasing state contributions to colleges?
There is no definitive answer to this question, as different states have different political dynamics and budget priorities. However, some general trends can be observed:
- - States that experienced severe fiscal crises during and after the Great Recession of 2007-09 tended to cut higher education funding more deeply than others. For example, Arizona slashed its per-student funding by 55%, Nevada by 36%, Louisiana by 34% and Florida by 32% between 2008 and 2018⁷.
- - States that have lower tax revenues or more conservative tax policies also tended to reduce higher education spending more than others. For example, Alaska cut its per-student funding by 31%, Oklahoma by 26%, West Virginia by 25% and Mississippi by 24% between 2008 and 2018⁷.
- - States that have higher proportions of Republican lawmakers or governors also tended to support decreasing state contributions to colleges more than others. For example, a study by researchers at Johns Hopkins University found that a one percentage point increase in Republican representation in state legislatures was associated with a $0.60 decrease in per-student appropriations between 1987 and 2011.
What effect will the recent Supreme Court ruling have?
On June 30th, 2023, the U.S. Supreme Court struck down President Biden's plan to cancel up to $50,000 of federal student debt for borrowers who earned less than $125,000 a year or received a Pell Grant. The court ruled that the president did not have the legal authority to do so under a 2003 law that allowed him to waive or modify certain provisions related to federal student aid programs.
The ruling will have a significant effect on millions of borrowers who were hoping for relief from their student debt burdens. According to an analysis by the Department of Education, Biden's plan would have erased debt for about 36 million borrowers (84% of all federal loan borrowers), including about 9.4 million who were in default or delinquency as of March 2020. The plan would have also reduced racial and gender disparities in student debt, as women and people of color tend to owe more and earn less than their counterparts.
The ruling will also have an impact on the broader economy and society, as student debt affects consumer spending, saving, investing, entrepreneurship, innovation, health, education and social mobility. According to a study by the Levy Economics Institute, canceling all student debt would boost GDP by up to $108 billion a year, create up to 1.5 million new jobs and increase tax revenues by up to $86 billion over 10 years.
How will it impact students?
The impact of the ruling on current and future students will depend on several factors, such as:
- - Whether Congress will pass any legislation to reform the student loan system or provide more funding for higher education. Some lawmakers have proposed bills to expand Pell Grants, simplify repayment plans, increase oversight of loan servicers and for-profit colleges, and create a pathway for bankruptcy discharge of student debt.
- - Whether states will increase their support for public colleges and universities or offer more financial aid and grant programs for students. Some states have implemented or proposed initiatives to make community college tuition-free or reduce the cost of attendance at public four-year institutions.
- - Whether colleges and universities will lower their tuition and fees or offer more scholarships and discounts for students. Some institutions have announced tuition freezes or cuts, increased financial aid or eliminated loans from their aid packages in response to the pandemic and the economic downturn.
- - Whether students will make informed choices about where to go to college, what to study, how much to borrow and how to repay their loans. Students can use tools such as the College Scorecard, the Net Price Calculator and the Loan Simulator to compare different options and estimate their costs and outcomes.
How will it affect the US economy?
The effect of the ruling on the US economy will also depend on several factors, such as:
- - How much student debt will continue to weigh on borrowers' financial situations and decisions. Student debt can limit borrowers' ability to buy a home, start a business, save for retirement, pursue further education or switch careers.
- - How much student debt will affect borrowers' mental health and well-being. Student debt can cause stress, anxiety, depression, lower self-esteem and lower life satisfaction among borrowers.
- - How much student debt will influence borrowers' civic and social engagement. Student debt can reduce borrowers' participation in voting, volunteering, donating, protesting and other forms of civic action.
- - How much student debt will exacerbate existing inequalities in income, wealth, education and opportunity. Student debt can widen the gaps between different groups based on race, gender, class, geography and other factors.
Conclusion
The student debt crisis is a multifaceted problem that has no easy or quick solution. It requires a comprehensive and coordinated approach from various stakeholders, including the federal government, state governments, colleges and universities, lenders and servicers, employers and philanthropies, researchers and advocates, and most importantly, students and borrowers themselves..
Bing, 7/1/2023
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