OPED: RAMIFICATIONS OF STUDENT LOAN WAGE GARNISHMENTS

Written by Michael Thervil

OPED: RAMIFICATIONS OF STUDENT LOAN WAGE GARNISHMENTS | CHART BY STATISTA

[Student Loan Garnishments] With the Trump Administration restarting the student loan payment process this week, many student loan borrowers who are already facing financial challenges feel as if their livelihoods are at stake. With current wages not keeping pace with rising inflation, employers are scaling back the hiring of qualified candidates, in conjunction with many employers undergoing hiring freezes; these variables and more have forced many Americans to face the possibility of being evicted from their homes. All of that when coupled with the Trump Administration garnishing wages at a rate of up to 15%, Americans that have acquired student loan debt or forced to either further scale back their spending or face years of economic hardship.

Granted, student loan borrowers signed off the loans that they have, but they did so under the guise of “if they went to college, they would get a job that justifies the high cost of college”. But the opposite is now true. We are predicting that this is going to have a detrimental impact on the American economy. Simply put, if consumers don’t buy then companies don’t make. And if companies don’t make then companies are forced by the hidden hand of the market to scale back on the hiring of employees, thus making both the job and economy weaker. All of this combined with federal reserve chair Jerome Powell sounding the alarm on America reaching the tipping point of a housing crisis, he estimated that it would take another decade to recover from that.

What makes the repayment of student loans even more difficult to bear for millions of Americans is that it undermines the value of American universities. Put another way, the garnishment of means that if consumers can't justify both the cost of college and the perceived value of obtaining a college degree which they were told would boost their earnings in the workforce, then they are significantly more likely to not enroll in college. Again, this will create another domino effect in the business model of colleges and universities across the country. If this domino effect continues long term, then we also predict that America will fall victim to what we like to call “Internal Brain Drain”. Instead of immigrants leaving America after obtaining high level degrees such as STEM degrees, Americans will be forced to witness generations of Americans unable to fill the gaps in such needed professions such as engineers, mathematicians, energy, science, and technology.

Many Americans now see the taking out of student loas as more of a “Debt Trap” that it to be avoided at all costs rather than an investment into their future. When it comes to garnishing the paycheck of millions of Americans, the question becomes “why now?”. We speculate the reason for the aggressive stance on garnishing the wages of Americans is because the American government is in far greater financial trouble than what is being pushed by both the American government and mainstream corporate news outlets. It appears that America needs both a financial overhaul when it comes to energy and infrastructure and the repaying of its debt to the Federal Reserve.