Investor Michael Burry is warning that student debt forgiveness could have “terrible consequences.” Burry gained fame for betting against phony mortgage insurance in what became known as The Big Short before the 2008 market crash.
What’s Going on With Student Loan Forgiveness?
President Joe Biden’s administration has offered to forgive up to $20,000 in student loans, after a long Covid-19-based moratorium on payments. However, the plan is being held up by legal action.
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What Happens Next?
The whole question of loan forgiveness has become intensely political. Republicans are going after student loans and Democrats are going after PPP after many of those loans were forgiven by the previous administration.
Companies like SoFi are left in the middle. Even if the Supreme Court rules against forgiveness, they will still have a lot of bad debt and angry debtors.
On the date of publication, Dana Blankenhorn held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.