Hedge fund chief Michael Burry warns of “terrible consequences” for the US if the Biden administration’s student loan debt forgiveness plan goes ahead.
Burry, whose successful bet against subprime mortgages was famously featured in the 2015 film The Big Short, made a dire prediction as the Supreme Court hears arguments this week over whether President Biden has the power to cancel student debt.
“Let’s not forget that the student debt problem is built on a foundation of terrible serious decisions,” Burry, 51, tweeted.
“Pulling generations out of these bad decisions will mean more bad decisions, tuition hikes, and dire consequences for America,” he added.
Apart from the potential increase in education costs, Burry didn’t elaborate on what “terrible consequences” he envisages for the country.
Burry followed his warning by detailing his own experience with student debt.
The founder of Scion Asset Management studied at UCLA and received his medical degree from Vanderbilt University before starting – and eventually leaving – a residency at Stanford University Medical Center.
“Once I left my Stanford residency to bet my future on what was about to occur, I had a six-figure education debt,” Burry tweeted Wednesday. “I used to be rattling sure I’d pay it back.”
Burry has amassed over 1.4 million followers on Twitter, where he incessantly tweets – after which deletes – his predictions about the US economy. Over the past yr, he has warned several times of a severe recession.
Under Biden’s plan, the federal government would forgive as much as $20,000 in student loans per borrower, depending on their income-based eligibility.
The conservative-majority Supreme Court appeared skeptical of Biden’s plan in hearings this week, raising doubts about the likelihood of final approval.
Judge Brett Kavanaugh suggested it was “problematic” for Biden to take enforcement motion despite the fact that Congress had not passed student debt laws.
The president and his plan’s supporters say forgiveness of student loan debt will provide much-needed relief to thousands and thousands of indebted Americans.
But critics have expressed various concerns about Biden’s plan, akin to whether his executive order exceeds the president’s powers.
Some critics have suggested that writing off student debt would further fuel inflation, which hit a decades-high last yr.
Others say the plan is just too costly and burdensome for taxpayers. Last yr, the nonpartisan Committee on Responsible Federal Budgets said the plan “will likely cost an astronomical $400-$600 billion” over time.
With postal wires