With Forbearance Renegotiation
By Steven J. Grisafi, PhD.
President Biden is being urged by Senate Majority Leader Schumer and Senator Elizabeth Warren to take executive action to cancel up to $50,000 of all Federal student loan debt. What he and the American People need to recognize is that the deferment of all required payments for student loan debt, until the pandemic ceases to inhibit the economy, provides the equivalent amount of monetary stimulus to the economy that the cancellation of all student loan debt would provide. This is because loans are to be repaid over an extended period of time. No student, who has borrowed $50,000 in student loan debt, is required to repay that $50,000 principal immediately. This ought make clear that the primary purpose of the Warren-Schumer student loan debt cancellation proposal is to pander to younger voters. The Warren-Schumer proposal is purposely not monetary stimulus, but wealth redistribution.
By enacting deferment of all student loan debt repayment, until the economy emerges from the pandemic crisis, we accomplish all of the monetary stimulus that the Warren-Schumer plan can muster. But without the terrible cost of a gross moral hazard. Deferment would teach the younger generation the discipline one needs to manage personal finances and would develop the character necessary to endure the trials and tribulations of adult life. One cannot argue that deferral is insufficient monetary stimulus. If deferral is insufficient then so too is debt cancellation. Those who argue that deferral is insufficient will point to the portion of student loan debt already in forbearance. But forbearance implies restraint imposed upon the debt collector. Such restraint need not be lifted. The procedure to follow in those cases of debt forbearance was demonstrated in Europe with regard to the Greek sovereign debt to banks in Germany and France. Those loans were renegotiated. Such should be the case for the student loan debt. Creditors need to be held in forbearance. Legislation written to cancel up to $10,000 of student loan debt, as is the desire of President Biden, can include the manner in which Federal student loan debt currently held in forbearance is to be renegotiated. The Federal Government underwrote those student loans and it can now determine how it wants the renegotiation conducted.
There will still be those who argue that monetary stimulus is only part of the motivation for this action and the wealth redistribution is essential. Unfortunately, while protesting in this manner they destroy their own argument. They indicate that the wealth redistribution is necessary because, as they allege, “people of color” are more likely to be oppressed by student loan debt. Such arguments infuriate me. I am no less Latin than any Hispanic American. I am no more White than any Indian American. Yet both groups identify as Brown and seek compensation for that designation. President Biden claims that because he is of Irish ancestry he understands this. He does not understand this. Irish Americans were never considered non-white by the Anglo-Saxons in America. They were discriminated against because they were Catholic. I too am Catholic and so is my sister. My sister and I both know from first hand experience that the Anglo-Saxons in America did not merely have contempt for us because we are Catholic, but because they considered Italians non-white. This belief enabled light skinned African-Americans to exploit the ignorance of the Anglo-Saxons and successfully present themselves as either Greek or Italian American. My point is that many other demographic groups in America can indicate as having endured discrimination.
As I explained in a previous article, if we are to correct the injustices of past discrimination in America, as I wholeheartedly desire, we can only do so as separately governed peoples. We all compete with one another in the marketplace for jobs and the accoutrements of life that make it worth living. To grant certain individuals advantages based upon the color of their skin, although it may have been the American way in the past, is no longer acceptable today. Apparently, Americans like to praise Dr. Martin Luther King Jr., but ignore his words. Judge me by the content of my character and not by the color of my skin. Statements made by former President Obama indicate that he cannot understand the viewpoint of people like me. Mr. Obama was not raised by his father. Mr. Obama was raised by a White Anglo-Saxon Protestant family. He had the advantages of a family long established in America. They never knew the Immigrant Experience in America. Nor did they ever know the existence of living on the wrong side of the railroad tracks in America. Mr. Obama thinks it odd that people like me see Affirmative Action as discriminatory to white men such as myself. Yes, I am a White man. I will not pretend to be Brown. My family had no such advantages in America as had Mr. Obama’s mother and her parents. But Mr. Obama cannot understand why I think it blatantly unfair that those who identify as a person of color are granted special treatment by the United States government. Extending a pattern of injustice is no way to correct previous injustice.