Originally published on LinkedIn March 17, 2021

 

Disclaimer; this is not a political article, it just happens to revolve around a political figure.

After much deliberation; I conceded and decided to write this article which is a departure from the norm, but in line with big picture thesis and granular detail analysis. Excluding national GDP, there are just a handful of items larger than $1.7 trillion. Hence, this is a business article which delves into advocating on behalf of the masses, and an executive decision which correlates to a great legacy in the eyes of the populous. It’s not a political article, the context just happens to revolve around a political figure. Student loan touches and affects tens of millions, and a significant proportion utilize LinkedIn. After stumbling upon or reading this article, sharing will be appreciated. The purpose of the plea is not to elicit likes and shares for vanity; rather, the goal is to spread the word in order for our representatives, senators, governors and other constituents to read or catch a glimpse of this article. Student loans bleed green; not blue or red and voters from both parties have shown ample support for its ratification. Since we are talking about $1.7 trillion and 44.7 million lives, you’ll have to excuse the article’s length. Although 44.7 million borrowers are directly affected, 88 to132 million or more lives bear the brunt. How is that possible? Most borrowers have at least an average of two or more dependents.

While in office; a President does several things such as ratify, promulgate, declare war, enter into treaties, inspire, veto, exercise executive power, protect its citizens via national security, pardon humans and turkeys alike. Usually, one occurrence tends to define a President’s legacy, so much so it is referenced decades later. As much as Presidents would like to choose what they would like to be remembered for, unfortunately most are not afforded the luxury to select what defines their legacy. Here are examples of items or issues that define some presidents. President Barack Obama is remembered for The Affordable Care Act or Obama Care, as its popular known. President Bush is remembered for the Iraq war, Bill Clinton is remembered for; well it’s public information. Ronald Reagan is remembered for several things, of which Reaganomics is atop the list, The Cold War and War on Drugs era. Richard Nixon is mostly remembered for the Vietnamese War and Watergate scandal which led to his resignation. Prior to Nixon being President in January 1969, the U.S. had already sent thousands of troops. It began in 1965 and 31,000 had already died. The reason for elaborating on Nixon is because sometimes it doesn’t begin with you, but it ends with you.

Barring an expensive war or a salacious occurrence in The White House, below are some items which could define President Biden’s legacy:

(1) Student Loan Forgiveness (SLF)

(2) Paying off or significantly reducing U.S. debt which is currently north of $28 trillion.

(3) Pegging the U.S. dollar to Bitcoin or another crypto currency.

(3) Printing of $9 Trillion; in 2020, the U.S., printed circa twenty percent more than it had printed in 200 years of its existence. Now with the $9 trillion about to be printed in 2021, we’ve just entered into a new era which cannot be reversed.

There’s another huge topic which is due and just, but America has never had the appetite to address it, at least not yet. Becoming the president of any country, but most importantly the U.S., is the highest achievement, honor and job anyone could aspire to. However, cancelling a debt which affects 44 million, but could indirectly assist 132 million individuals is a higher calling. One might argue; that has utilitarianism written all over it and it’s almost utopic. Anyone that harbors such a sentiment during a pandemic should examine their humanity, empathy level and check if their heart is still pumping human blood or just prejudicially calcified. If they are still on the fence, we urge them to cast their minds back to when the Fed bailed out Wall Street, Bear Stearns, American International Group (AIG), Chrysler, GMAC and others. When assistance is awarded to big firms the word Socialism, never arises. As that word is never associated with government bailout for big companies, it should not cross the mind of anyone as it relates to Americans. President Biden can utilize executive order to make it happen swiftly.

Prior to being president; Mr. Biden was already in favor of SLF. This article is focused on the forgiveness amount of $50,000 not $10,000 which he ran on, as part of his national strategy to get the economy back on track. While $50,000 might sound like a lot, a significant number of four year college borrowers have loans in excess of $70k which accumulated interest daily and will continue to, after the moratorium is lifted. On average business school, law and medical students are in debt for a minimum of $100,000 to $400,000. Congresswoman Pramila Jayapal, Sen. Charles Schumer, Sen. Elizabeth Warren and more than twenty other politicians are simply asking for a haircut and trimming of the edges; a short back and sides. For those opposed to the idea, even after the $50k forgiveness, the fact is millions of borrowers will still owe a material amount. Read what political protagonists are saying Watch #Cancelstudentdebt $50k forgiveness is for households with less than $100k in annual income, it’s not for everyone.

 

Presidential Legacy In the Making

Wayne Dyer said “When you change the way you look at things, the things you look at change.” As of February 16, 2021 President Biden still disagreed with members of his party who proposed $50k student loan cancelation per borrower. Perhaps, decision makers should view the situation through a different lens. One which is not political, one which makes business sense when analyzed properly. The decision to help the American people at a precarious juncture is warranted. If we weigh the number of times big businesses were bailed out vis-à-vis taxpayers, its equitability is easy to justify instantaneously.

The most important fact is, we have a finite time on earth. At the end of one’s time, an honest introspection and reflection will undoubtedly score the stroke of a pen which took seconds to maneuver, but delivered joy and alleviated hardship as the right choice. Aside from that, it’ll be a legacy the President and some of his heirs will be forever proud of. For the reasons above, I have a strong feeling something positive will occur. Even if not $50k forgiveness, perhaps a $35k concession, but $50k is best.

Some of the Politicians Advocating & Working Hard for 44 Million Borrowers

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Senate Majority Leader Chuck Schumer (D-NY), Sen. Elizabeth Warren (D-MA), and Reps. Ayanna Pressley (D-MA), Ilhan Omar (D-MN), Mondaire Jones (D-NY), and Alma Adams (D-NC) speak to the press to reiterate the need to cancel student debt.

Bailing out Americans en masse as a result of one of the worst pandemics the world has ever witnessed is not too much to ask and be granted. Especially one which killed over 2.6 million globally; with the U.S., accounting for about a quarter and counting, 524 thousand dead as of 3rd of March. SLF is what America needs now; it’s the mass supper which will unite the country. Imagine what future generations will say if this is not fixed. Our political forebears were quick to bailout big businesses who caused their misfortunes, but were deaf to the cries of the people at their most vulnerable. If forgiven at $50k per borrower, SLF will be remembered and talked about for generations.

Coronavirus Deaths, Decimation & Effect: Huge Reason to Cancel $50k SLF

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Critical Points to Bear in Mind

  1. Current student loan in the U.S. stands at $1.71 trillion owed amongst 44.7 million borrowers. Point of clarification; the fact that $50,000 is forgiven does not mean the entire $1.71 trillion is wiped off. The deal applies to folks making less than $100,000 per annum. According to the diagram below 18.5 percent owe above $50k. There is no approximate figure which shows how high above $200k. Exact figures are required to conduct in-depth analysis, but we know there are borrowers who owe as much as $400k. Borrowers with loan amounts above $50k are still beholden to the debt, and are responsible to pay the balance. 81.5 percent of borrowers have $50k or less and 18.5 percent of borrowers owe $50k or more. The 4.5 percent on both sides is an equal split of the loan amount $40,000 to $59,999. 18+17 +21+21 + 4.5 = 81.5% and 4.5 + 5 + 3 + 4 + 2 = 18.5%

2. Student loans accrue interest, hence principal after $50k forgiveness will continue to rise.

3. The fact that Americans seek $50k SLF amount now, does not automatically mean future student loans will be forgiven.

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More stats here

How Does The Government Recoup Its Forgiveness Dollars?

Short answer forgive and forget. Lest we forget, the U.S., government lost $11.2 billion on GM’s bailout. Total loss on GM, GMAC and Chrysler was $10.2 billion.

  • U.S. government is not a charity organization, so it can buy or convert a portion of current, as well as future student loan revenue into Bitcoin or Ethereum. It can also hold on to seized bitcoin. Hodling until it reaches $250k or more and liquidate for cash. The government will make more than $1.4 trillion in the next 5 years. The government should consult some experts and Mayor Francis X. Suarez of Miami, who is considering putting some of his city’s treasury into bitcoin and digitizing Miami. What makes you so sure the government will make money from bitcoin? I am writing as someone who predicted bitcoin’s price four times with accuracy, the prediction is public.
  • Are you suggesting that the government should buy bitcoin just to make its money back? The government already has bitcoin. In 2014 U.S. Marshals auctioned off Bitcoins seized from Silk Road’s Ross Ulbricht. A total of 50,000 BTC was seized in today’s value that’s as of 3:41PM the 17th day of March 2021. 50,000 x 1 BTC 58,016 = $2,900,800,000
  • February 2020; U.S. Marshalls auctioned off 4,040 BTC circa $40 million dollars, the government can keep and hold on to its stash.
  • This point is controversial, but both parties get what they want. Borrowers receive their $50K cancellation and government receives some money back. Out of the donated funds pledged by U.S. billionaires, a portion could go to the government to assuage its purse strings. It’s a one off deal or fixed amount paid over several years.

 

Reasons to Forgive Loans

After the second world war, America enacted The Marshall Plan in 1948 and stepped up to help rebuild Europe with $15 billion. Rebuilding Europe ultimately helped America otherwise no trading or strategic partners. Helping Americans, helps the U.S. government. America stood up then in a position of leadership to rebuild Europe, the government can step up now to forgive Americans.

  1. 2020 was one of the worst years in human history. Its devastation, pain and havoc will linger for decades. We haven’t witness anything this severe in a 100 years. Hence, desperate times calls for desperate measures. The appetite for forgiveness and door of opportunity beckon.
  2. Protracted unemployment; in some extreme cases over two years, loss of jobs for tens of millions, closure of businesses, emotional trauma and the loss of loved ones have increased personal debt and pushed people over the financial edge.
  3. Cost of living has increased significantly over the years, but salaries have stagnated. A roof over one’s or the family’s head is the most important monthly expense, followed by food, children’s expenses, life insurance, car loan and credit cards etc. Wage stagnation reduces the ability to pay back or service student loans monthly.
  4. The shackles of debt removed from one’s life translates to economic activity such as home purchase and business creation which both generate revenue for the government.
  5. Opposers and antagonists of SLF should remember Savings & Loan Crisis, The conservatorship of Fannie Mae and Freddie Mac, Bear Stearns, American International Group (AIG), Chrysler, GMAC and GM. The government lost $11.2 billion on auto bailout most of which the taxpayers bore the brunt. An inverse Robin Hood tactic.
  6. Some of the biggest companies in the world have being bailed out or being the recipient of government subsidies. The last bail out of recent memory happened in 2008 for big businesses and Wall Street. My position is not against the bailout of corporations. It’s more of an equitable stance; do to the people, as you do unto big firms.
  7. Exorbitant tuition is a sure way to prevent some of our best and brightest from furthering their education. Brilliant minds abound, but most lack capital and access. Imagine someone who could potentially cure cancer, diabetes or other debilitating diseases unable to help humanity because a $200k medical student loan is too scary.
  8. Education shouldn’t be a burden, it’s worse for those with two or more children.
  9. $50k SLF does not translate into a check in the pocket of Americans. It is simply a way to assuage the debt burden. Americans are not disciplined savers, so this is good news for the government, because the SLF will transfer back into government coffers from taxes paid on large purchases.
  10. Time to reset tuition at our colleges and universities.
  11. It takes time to rebuild. It will take years to crawl out of the valley of debt. Currently millions are directly or indirectly impacted by 524,000 deaths and tens of billions lost commercially. School loan is the furthest thing from the minds of survivals.
  12. Seniors with student loans will most likely default, and are currently defaulting the most.
  13. Big corporations are able to use tax codes to their advantage and pay less tax percentage wise, the average Joe cannot even dream of it.
  14. This is a recession like no other. Government needs to help people to help the country bounce back and grow.
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Millions of Americans Saddled with Student Debt

Big Questions, Suggestions and The Issue at Hand

SLF is not a Democratic or Republican issue, it is for Americans by Americans.

  1. $40k which was the median salary in 2019 is now the new $25k. Rent has skyrocketed in NYC, NJ, California and other states. Illustration $2,000 average rent = $24k a year. That is more than half of $40k and taxes is not factored in yet. This simple illustration shows how student loans becomes cumbersome, even if the salary doubles to $80,000.
  2. Fixing student loan issue permanently, otherwise we’ll be talking about this in the near future.
  3. Using previous growth rate and percentage increase; some universities will be charging $300,000 to $500,000 in the near future. Since salary increase lag far behind tuition increase and in some cases inflation, the problem is unsustainable. Some medical students already have $350,000 to $500,000 in student loan debt.

“Astra Taylor documentary filmmaker and author of the 2019 book Democracy May Not Exist, But We’ll Miss It When It’s Gone. Taylor has become a leading advocate for debt forgiveness, and she treats it as not just an economic problem but as a small-d democratic problem.”

Biden can Cancel Student Debt on Day One

How U.S. Student Loans Became A $1.6 Trillion Crisis

Real life Stories

Examples of real people and top professionals worried, scared and questioning their advanced degrees. Sonali Basak a Bloomberg reporter spent $150,000 on her MBA and she says “The Value of My $150,000 MBA Is Now in Question.”

Nebraska grandmother gets almost $90.000 student loan discharged through bankruptcy While possible as evidenced by the article on Yahoo; the bankruptcy route is a dangerous path. It sets a bad precedent.

Anecdote from Graduate School Loan Borrower

The individual recounts “I researched two international Universities INSEAD and McGill. I settled for McGill, an Ivy League University in Canada. Although the funds for tuition was available, as an international student, I would have to live on campus and pay for everything. As an international student, I couldn’t work in Canada, so my second choice was between NYU School of Business Stern and The Zicklin School of Business. After evaluating the ROI; the choice was easy, I choose Zicklin which was half the price of NYU’s $100k plus tuition then.” Although Zicklin is now $85,000. The reason for this story is to point out the disparity in cost. McGill an Ivy League in Canada, and one of the best schools in the world cost less than most of our higher learning institutions. Yes the U.S., is a capitalist country, but if Canada can do it, since we are bigger, we can too, or at least try to match them.

Universities with Largest Endowments

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Universities with Largest Endowments Per Student

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Update & Development

Biden’s Education Secretary just canceled $1 billion of student-loan debt for about 72,000 defrauded borrowers.” Okay noted, however, this is a different issue which addresses a microcosm of the discussion at hand.

Solution

It’s a complex issue, so different institutions will have to come together to iron out the details for a long term sustainable solution. Below is a humble article version attempt for a $1.7 trillion problem.

  1. Some universities have endowments the size of some countries GDP. Reviewing the charter and allocating sizable amounts to assuage yearly tuition will help. Since endowments are invested, their cumulative interest and large principal balance remains.
  2. Out of the donated funds pledged by U.S. billionaires, a portion could go into a universal college fund to assist students from different universities. MacKenzie Scott up the ante by giving almost $4.2 billion to 384 organizations, colleges and universities.
  3. Put a cap on percentage increase e.g., every 5 to 10 years.
  4. Assessing and accrediting more online schools with the highest standards is a small step in the big picture. Students who opt for cheaper routes will have a viable option.
  5. Government allocating $40 billion to colleges and universities is great, but it should be targeted and focused on institutions that need it most.
  6. Since the current path is unsustainable, government and other authorities will have to come to the table to have a hard discussion which will shape the future.
  7. Halt exorbitant annual tuition increase. Professors’ and administrators’ salaries do not rise commensurately with the percentage increase, neither does the educational value.
  8. If interested in getting involved you can check out what Alan Collinge of Backbone Campaign is doing, listen to him here.
  9. If the movement is not garnering enough momentum, enlisting the energy and showmanship of Jimmy McMillan the 2013 mayoral candidate who ran on, the “Rent Is Too D_ _ n High” might help. It might be the winning strategy. He will surely change it to “Student loan Is Too D_ _n High.”