Sun, May

The Ultimate Winners of the Loan Forgiveness Program: Coddled Universities and Banks 


THE DOCTOR IS IN - Faux-economics gurus, faux-taxpayer experts, and faux-students rights spokesmen and "thought leaders" are weighing in on how wonderful (or dangerous) President Biden's student loan forgiveness program is. 

So here I will weigh in, as a former student loan recipient, and as a taxpayer, and as someone who believes in student rights (and also the rights of those who paid off their loans, or couldn't afford college because they couldn't take out a loan). At least I am not claiming to be an expert, but I think that my opinion is as reasonable and fair as anyone out there. 

Because I'm not as biased about this as some may think--I'm not a heartless liberal (oh, yes, they're way more heartless than they think they are) nor a heartless libertarian (who probably need to be more flexible in the real world, lest they live their lives and die being ignored by the majority who do live in that real world). 

The fact remains that President Biden may have done this for humanitarian reasons, but let's be real here: young voters came out in droves and helped this improbable career politician (and a well-known bombast and professional liar) defeat the non-politician (and also a well-known bombast and professional liar) win the November 2020 presidential elections. 

And so it's payback from President Biden to the youngsters who voted for him, and a message of "you voted for me, so here's your paycheck". 

Now this may seem one-sided, so here's the other side: regardless of the clueless idiot/tool in the White House, young people in their 20's and 30's (and even 40's), and who needed a degree to achieve their career goals, CANNOT afford a house (or even rent!), and CANNOT afford enough food and goods to acquire their own basic needs.  

And let's not even take into account any desire to have children that they can afford. 

So hence the $10-20,000 for lower income (I guess that in today's America $125,000 a year counts as lower income) professionals makes sense. 

Life is getting damned expensive for virtually all of us. 

But the other side of the coin is the "talk to the hand" or even the "middle finger" that went out to two groups: 

1) Those who scrimped and saved to pay off their own loans (like yours truly, who did whatever he could to scramble and pay off a significant but relatively small--compared to other physicians--five-digit student loan). 

2) Those who did NOT go to college because they had to work, raise children, or otherwise address immediate expenses that prevented them from achieving THEIR ultimate career goals. 

So let's make another thing clear: in the November 2020 elections, more well-educated white voters swung the election to President Biden, while Blue Collar/Main Street America voted for the other guy in droves. 

And President Biden, who's a lot more cruel than many realize, had and has NO desire to unify America as he originally stated. 

Biden and the Democratic Party--once representative of "the little guy" on Main Street--has gone woke and callous and made it clear that those more likely to vote Republican will PAY and PAY HARD for the November 2020 elections. Literally, they will PAY. 

Those screaming about how they paid their loans, and those benefiting from student loan forgiveness "getting rewarded for doing the least amount?  

Relegated to easy-street, coddled billionaires

And those questioning the constitutional power of a president to forgive student debt, as House Speaker Pelosi recently proclaimed as a Congressional right

Well, let's refer to the above, aforementioned political payback sought after by President Biden by those who got him over the top in November 2020, and who he's relying on to save his hiney in November 2022. Suddenly, it's just fine for a President to be authoritarian, and just a few years after former President Trump was declared to be authoritarian. 

But beyond all of this...very well beyond all of this, is that such an act of President Biden will likely have two rebound effects that aren't so good for any of us: 

1) University costs will continue to rise unabated, because they know they'll get paid from the government even when their former students cannot reimburse them. Hence Senator Warren's claim that this will reduce inequality and inflation is probably a dead wrong prediction

2) And the banks who probably fear a sweeping wave of bankruptcies over unpaid student loans? Oh, they'll enjoy the short-run benefits of a cash infusion from Washington to cover these student loan debts. 

But again...what will the long-term effects be of the student loan bailout.  

Well, yours truly is NO expert, but he's lived a little--like through the S & L payout, and the "too big to fail bailout" we've seen before. The shock waves will ripple through the banking industry

Because a sudden presumption that ALL student loans will be forgiven, and not paid back, may lead to bankruptcies and a remarkable end to loan profits to these same banks.  

And maybe the banking customers will have to pay more, and maybe we'll have the next big impetus for a Great Recession similar to that we saw in 2007-2009. 

The Road to Hell is paved with good intentions, and whether President Biden's intentions were good, or just political, is a question that will have to wait for the indirect consequences of his student loan forgiveness proclamation. 

Because all things have direct consequences...and some surprising indirect consequences.  


(Kenneth S. Alpern, M.D, is a dermatologist who has served in clinics in Los Angeles, Orange, and Riverside Counties, and is a proud husband and father to two cherished children and a wonderful wife. He was termed out of the Mar Vista Community Council (MVCC) twice after two stints as a Board member for 9, years and is also a Board member of the Westside Village Homeowners Association. He previously co-chaired the MVCC Outreach, Planning, and Transportation/Infrastructure Committees for 10 years. He was previously co-chair of the CD11 Transportation Advisory Committee, the grassroots Friends of the Green Line (which focused on a Green Line/LAX connection), and the nonprofit Transit Coalition His latest project is his fictional online book entitled The Unforgotten Tales of Middle-Earth and can be reached at [email protected]. The views expressed in this article are solely those of Dr. Alpern.)

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