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Op-Ed: Time to End the Taxpayer-Subsidized Delay on Student Loan Payments

Op-Ed: Time to End the Taxpayer-Subsidized Delay on Student Loan Payments

“While some Americans do indeed continue to struggle amid the pandemic and government restrictions on their livelihoods, college-educated workers are doing just fine.”

Lots of programs that started under the pandemic need to end. This is one of them.

Brad Polumbo writes at the Washington Examiner:

It’s time to end the taxpayer-subsidized vacation for student loan payments

From the very beginning of the pandemic, we have expected essential workers such as grocery store clerks to grab a mask and get to work. Yet, for some bizarre reason, the federal government decided that relatively well-off college graduates needed a vacation from their student loan payments — at taxpayer expense, of course. The educated class’s vacation from paying their bills continues 18 months later and, thanks to an extension from the Biden administration , isn’t set to end until January 2022.

This is nonsense. While some Americans do indeed continue to struggle amid the pandemic and government restrictions on their livelihoods, college-educated workers are doing just fine. After all, broadly speaking, college graduates are much more likely to work in roles that function remotely, so they were far less likely to get laid off during the pandemic.

You don’t have to take my word for it. As of August 2021, the unemployment rate for college graduates aged 25 and over, the group that holds most student loan debt, was an astonishingly low 2.8% . So, even those who thought there was some justification at the very beginning of the pandemic for this moratorium on student loan payments must acknowledge that college graduates aren’t experiencing economic duress or joblessness. Why, then, should they be off the hook for paying their bills like everyone else?

While the total of $1.6 trillion-plus in outstanding student loan debt owed to the federal government sounds daunting, it’s more manageable than you’d think. Most people’s monthly payments aren’t actually some crushing burden. As of 2017, the median monthly student loan payment was just $222, a significant sum but hardly budget-busting for most college graduates. Despite progressive rhetoric, it’s not a radical or ruinous move for the federal government to ask people to resume paying back taxpayers what they owe.

Read the whole thing.


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I was sent an email months ago saying that my student loan payments would restart in November.

Brad is WAY behind the times.

    davey1983 in reply to irv. | September 24, 2021 at 1:50 pm

    Brad is not the one ‘WAY behind the times.’ The freeze was extended to January 31, 2022 on August 6.

      Looks like we’re BOTH behind. I just checked online and it says my next payment isn’t due until March.

      When the deferments started I kept up my payments for a while. But then they inaugurated Biden for some reason. I didn’t see any point in paying if there was some chance the loans would be forgiven anyway (which I have not asked for and wouldn’t).

      I guess the extension means that someone in the pretender’s administration hasn’t given up on the possibility of student loan forgiveness.

        davey1983 in reply to irv. | September 25, 2021 at 12:00 pm

        No, I am not behind the times. You are still incorrect. The freeze ends on January 31, 2022.

        The fact your servicer is currently indicating your next payment is in March is irrelevant. Go read the actual announcements. You will start accruing interest on your loans starting February 1, 2022.

        Your servicer should require payments to start in February as well, but I understand that many of the servicers are claiming that it is administratively impossible to do so. Though, I call BS on that claim– they have had over a year (and still have 4 months) to prepare for this.

        While it sounds like you paid some on your loans (which I commend you for), most borrowers have not. Which means they still owe interest from before the initial freeze. IF servicers are starting payments up in March, this is bad. It means that most borrowers will have to pay two months of interest in their first payment OR the servicers plan on folding the owed interest into the borrowers principle balance. In other words, student loan borrowers will OWE MORE than when the pandemic started.

        Either way, the freeze was a horrible idea. I have seen several reports that borrowers claim they would not be able to make their $200 payment. I call BS on that claim as well– most of these borrowers are college educated making more money than the average person. Yet, they claim they can’t make a payment that is likely less than their car payment.

By suspending the repayment of student loans the government has placed the borrowers in a position to “forget” they have this debt. Human nature will cause many of them to fill this portion of their monthly budget with other expenses. When the time comes to begin repayment these borrowers are going to be feeling a lot of pain. Sometimes we aren’t helping when we try to make things easier.

    henrybowman in reply to whm3113. | September 24, 2021 at 9:10 pm

    That’s all part of the plan. The sudden pain will balloon demands and therefore political pressure for permanent writeoffs.

    davey1983 in reply to whm3113. | September 25, 2021 at 12:07 pm

    Indeed. I have already seen several news reports claiming that borrowers wouldn’t be able to make their (on average) $200 payment. I am having a hard time feeling sorry for these borrowers. They should have continued to set aside that money, possibly putting it in a savings account (or the stock market).

    That way, if student loans were forgiven, they have a nice pile of cash to start their nest egg, or buy a house, etc. If the payments start back up, they are used to making the payments and they have a nice pile of cash they can then use to make a large one-time payment and greatly decrease their balance.

The student loan forbearance is controlled by Congress and is an explicit part of the budget. It can not be “hidden.”

In contrast, the practice of most colleges to charge a higher than otherwise necessary level of tuition and then use the resulting funds to offer financial aid to students is “hidden” and poor public policy. It is a form of price discrimination. If I were education czar, I would have tuition reflect the true cost of the services provided and the limit financial aid to gifts or endowment income earmarked for that purpose. If the number of students who can afford to pay the tuition is less than the enrollment that a college needs, then cut costs and lower the tuition. Do not let financial aid distort what tuition levels are considered “affordable”. If as a matter of national policy, student grants, loans, loan forgiveness or direct institutional support is provided by Congress, those steps will not distort the competition to provide the greatest value for each tuition dollar.