President Joe Biden promised student loan cancelation during his initial presidential campaign. This became a big selling point for one-issue voters strapped with debt, but Biden likely knew this was a promise he could not carry out. The Biden Administration made a dent in the student debt crisis by forgiving around $127 billion, which means that tax payers at large will foot the bill. Three years have passed since student loan payments were paused due to COVID, and now, millions are refusing to resume payments.
Around 43 million borrowers now owe $1.63 trillion in student loans. Intelligent.com found that around 25% of student loan borrowers have not made a single payment since October 2023 when the grace period ended, and 60% have missed at least one payment since then. Why? Well, 69% state that they simply can no longer afford to pay off their debt. Around 9% said they are entitled to debt cancelation and will not pay a single penny as an act of resistance.
Boycotting student loans is asinine. Should people boycott their mortgages, car loans, or other debt that they deliberately agreed to take on? Lenders will not cave as this is simply business.
The on-ramp period will end in September 2024 and 18% have said they are waiting nine more months to resume payments. Do they realize their loans are still accumulating interest? They still need to pay the accrued interest before any of their payments go toward the principal. This period was merely meant to give borrowers a cushion from October 2023 to September 2024 to sort out their finances. The Education Department will begin reporting missed and late payments to credit bureaus in September.
Millions may see their credit scores ruined. Loans become delinquent after 90 days, and after 270 days, loans will go into default. The government will prevent anyone found delinquent from receiving future aid. Forget receiving any tax refunds. They will garnish wages, taking what they feel is necessary without factoring in your other monthly expenses. Still holding out on the student loan boycott? The government can take legal action against borrowers’ assets. You could lose absolutely everything.
To the 69% who say they can no longer afford their loan, bankruptcy is no longer an option, thanks to politicians in the same party offering loan forgiveness without a plan. Former President Bill Clinton repealed the Glass-Steagall Act of 1933 in November 1999. This handed students to the banks on a silver platter as they could no longer discharge debt through the traditional bankruptcy process.
September 2024 also happens to be when our models predict a massive rise in civil unrest and a potential DRAFT at the end of the month. People wanting to boycott will lose absolutely everything if they abandon their loan payment responsibility. There are serious consequences for failing to repay your debts.