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Elizabeth Warren’s Loan Redistribution Plan isn’t just Bad Business, it’s Morally Bankrupt

Elizabeth Warren’s Loan Redistribution Plan isn’t just Bad Business, it’s Morally Bankrupt
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It is undeniably a tough policy to hate, and an easy political sell. Who wouldn’t want poor loan-burdened students to catch a break? Who wouldn’t want those greedy predatory lenders brought to justice  – evil loans forgiven – by the power and glory of democratic socialism?

Well, first off let’s get something clear; this isn’t loan cancellation, it’s loan *redistribution*. Smart people understand this. Warren probably understands this. If Trump is smart – let alone lucky enough to face Warren in the 2020 showdown – he’ll emphasize this as much as possible.

Nobody is stupid enough to ‘cancel’ loans. Well, hopefully nobody. As that’s not only the fast track to completely freeze all the glorious and necessary liquidity of the capitalist economy; it’s the path to completely disintegrate the integrity of a fiat currency based economy at all. No, Warren’s plan is to *pay* the loans for the debtors. Forbes lays it out in detail,

“The student debt crisis is real and it’s crushing millions of people — especially people of color,” Warren said in a statement. “It’s time to decide: Are we going to be a country that only helps the rich and powerful get richer and more powerful, or are we going to be a country that invests in its future?”

Specifically, Warren’s legislative proposal for student loan debt forgiveness would:

  • Cancel $50,000 in student loan debt for every person with household income under $100,000.
  • Provide substantial debt cancellation for every person with household income between $100,000 and $250,000.
  • Not tax as income student loan debt that has been canceled.
  • Also, make private student loan debt eligible for cancellation.
  • Streamline the student loan debt forgiveness process using data and income information already available to the federal government.

Importantly, Warren’s plan offers no student loan debt cancellation to borrowers with a household income above $250,000, which she says is the Top 5% of earners. There would also be “phase-outs” based on income. The $50,000 cancellation amount would phase out by $1 for every $3 in income above $100,000. According to Warren, for example, “a person with household income of $130,000 gets $40,000 in cancellation, while a person with household income of $160,000 gets $30,000 in cancellation.”

Sounds pretty good right? Well, if you’re someone currently burdened with often abusive student loans, pure self-interest would make it nigh impossible to convince you otherwise. But if you aren’t it should be easy. Why? Well, because you’re paying for it, chump…

‘No!’ exclaims Warren. Only those dastardly uber rich will have to pay, as per her apparent plan to couple the program with an ‘Ultra-Millionaire Tax’ that would include a 2% annual tax on the 75,000 families in the U.S. who have at least $50 million in net worth.

But assuming a President Warren can manage to get Congress to agree to tax that tiny portion of our population, its laughable to presume such a paltry source – again only 75,000 families – is meant to cover the loans of the 44 million Americans saddled with student loans equally roughly $1.5 trillion dollars…

This is the crux of the issue. Warren isn’t waving a magical wand to make the evil bad debt disappear, she’s using the government to pay it off in full; notedly in what amounts to a fiscal wet dream for the loaning institutions. And who funds the government? Taxpayers.

Depending on the specific context of your taxpaying this can be more than irksome, it can be downright immoral. Consider a student who *did not* incur loans. Who, through financial aid, employment, scholarship, and three working gap years (*coughs* ahem) managed to obtain their degrees without them. Who through a myriad of personal sacrifices of time, energy, or just picking a hard but fruitful career path, manage to pay them off just fine.

Warren’s plan – and any like it – spits in the face of those people.

Redistributing the debt of people who *chose* to take the admittedly less than pleasant loans to those who did not or have already paid them off is immoral. And ultimately that’s exactly what these types of plans do in shifting the burden to the already massive burden carried by American taxpayers.

There are many things we perhaps *should* be doing to assuage to student debt in the US. Things like interest forgiveness/reduction or allowing them to be shed with bankruptcy. Forcing everyone else to pay for them is not one of the things.

Warren’s plan isn’t just unsavvy in terms of financial sense, its an immoral use of the government.

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9 Comments

  1. A P Terrell

    I enjoyed this insight and agree that taxpayers will ultimately be paying for college debt – future & past.
    Free is easy to vote for and my generation (I’m 62) will be overwhelmed in years to come. My fear is that the Elizabeth Warren’s proposals represent the next fiscal policy accompanied by financial disaster.

    Reply
  2. Bob

    100 percent bullshit ….. when she can’t get it thru congress to tax the rich……. she will pass it on to the middle class …….. I’m not paying any student loans …… college wasn’t an option for me ….. went to work worked 2 jobs for many years

    Reply
  3. Becky

    I worked 3 jobs and attended a private college full time nights and weekends. I took one student loan for $1500 and had that paid 2 years after I graduated. I decided on a sensible major, Accounting, that I was already working in so my degree made sense and my employers chipped in because it was work related. Rather than taking basket weaving, women’s studies or any other ridiculous major\minor combination how about trade school or a sensible major? One where you actually have a shot at earning a decent salary. College is over rated and trade schools are a better alternative for many. Maybe if we stopped pushing the narrative that you’ll never get anywhere without a college degree, people will stop racking up debt they can’t repay for an education they never wanted, or needed.

    Reply
  4. Rick

    Hey folks, you all know this socialist for what she is. Does this program (farce) surprise anyone? Warren really needs to go and discuss this with Vlad Putin, he can give her real insight on how to screw the common person. Oh but watch out Liz, Vlad may try to bed you — Yuk!!!!

    Reply
  5. NavVet

    Warren is Morally Bankrupt

    Reply
  6. Michael Spinelli

    This article speaks of the undeniable truth about the realities of Elizabeth Warrens plan. For those of us with family income under $100,000 whose children managed to finish college without any student debt, this plan is definitely immoral. My children don’t have any student debt because my wife and I saved towards their college education from the time of their birth using a college savings plan available in my state. Also, my children lived at home to reduce costs, attended local schools, and worked as often as they could to contribute. They worked hard while in college and managed to do well, find jobs, and are currently self supporting and successful. This method worked for us and will work for others if they accept responsibility for their children rather than denying it.

    If Elizabeth’s plan is passed, were my wife and I along with my children suckers? I know many families who didn’t take responsibility for their children’s future and didn’t save ANYTHING, burdening their children with SIGNIFICANT student debt in order to live better than we did. I’ve long felt those parents irresponsible and greedy. They would end up benefiting without the pain despite their irresponsibility. This is definitely wrong. These parents WILL thank Elizabeth?

    Let’s totally ignore the wrong done to us as a consequence of this plan, instead let’s just consider the future. During the next five or ten years as a consequence of Elizabeth’s ill advised plan, many parents will forego saving towards their children’s college and their children will consider more expensive schools away from home, expecting a bale out too. If it doesn’t happen, those children will have dramatically more debt than they would otherwise have had. Will they thank Elizabeth?

    Under Elizabeth’s plan what incentive will colleges and universities have for reducing their costs? In fact they’ll have every justification for increasing salaries and costs since the government is paying the tab. And, when the future realizes the mistake of passing Elizabeth’s plan, college costs will be much higher. Will students thank Elizabeth?

    Another consequence of Elizabeth’s plan is the loss of incentive. My children worked hard while in school in both their classes and in their jobs since they didn’t want to disappoint us and out of respect. With Elizabeth’s plan, children would have no incentive to succeed since there wouldn’t be any consequences for failure. Many students may go to college to have fun since the governments paying the tab. Many won’t succeed like my children did as a result. Will they thank Elizabeth?

    Since Elizabeth’s plan is being paid for by future generations in the form of increased government debt, my children’s children will have to pay when the government collapses due to overwhelming debt. That’s immoral too. Will they thank Elizabeth?

    As we can see, there are heavy and undeniable consequences of Elizabeth’s plan. And why must we pay those consequences? To provide liberals more reason to vote for her, thus giving Democrats the opportunity to destroy our future. The way to reduce student debt, especially in the future, is to scrutinize colleges and universities making certain they reduce their costs. There is nothing in Elizabeth’s plan to do that.

    Reply
    • Connie

      You Sir, are the reason there are younger folks with the ability to think for themselves and work hard! Those are not the people Warren (or any Democrat is trying to appeal to). She wants the lazy, Me First, I have the right to do what I want people. The more she offers for free, the more they love her. You and your children, however can see through her charade.

      Reply
  7. Kurt Walker

    This loan forgiveness is absolutely stupid. The door was opened by the democrats and allowed some of the “hogs” to get as much as they wanted from the program. The big fat girl who ran for governor of Georgia last election owned the government $200,000 in the program simply be continuing to register and applying for the money. Now to say let’s just forget about it and charge the taxpayer is unacceptable.

    Reply
  8. Katie

    She’s a democratic, what do you expect?? And she also wants to give all the illegals a free ride too. Where is all that money coming from? From the rich?—oh no— it’s coming straight out of your pocket—the taxpayers!! Use your good sense God gave you people!!

    Reply

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