‘Terrible consequences’ if student loans are forgiven, warns Michael Berry

Hedge fund chief Michael Berry warns of “terrible consequences” for the US if the Biden administration’s plan to write off student loan debts is supported.

Barry, whose successful bet against subprime mortgages was well-described in the 2015 film The Big Short Deal, delivered a grim outlook as the Supreme Court hears arguments this week about whether President Biden has the authority to write off student debt.

“Let’s not forget the student debt problem is built on the foundation of terrible big decisions,” Berry, 51, tweeted on Tuesday.

“Spare generations of these bad decisions will mean more bad decisions, higher tuition fees, and terrible consequences for America,” he added.

Beyond the potential increase in the cost of education, Berry did not specify what “terrible consequences” he envisions for the country.

Berry continued his warning by detailing his own experience with student debt.

The founder of Scion Asset Management attended UCLA and received his medical degree from Vanderbilt University before starting — and eventually leaving — a residency at Stanford University Medical Center.

“When I left my residency at Stanford to stake my future on what was to become, I had a six figure education debt,” Berry tweeted on Wednesday. “I was damn sure I would cry.

Berry has over 1.4 million followers on Twitter, where he frequently posts and then deletes his forecasts for the US economy. Over the past year, he has warned several times of a severe recession.

Under Biden’s plan, the federal government will forgive up to $20,000 in student loans per borrower, depending on their eligibility for an income-based loan.

The Conservative-majority Supreme Court was skeptical of Biden’s plan during a hearing this week, raising doubts about the likelihood of it receiving final approval.

Judge Brett Kavanaugh suggested that Biden’s executive action was “problematic” even though Congress did not pass legislation addressing student debt.

The president and his plan’s backers say writing off student loan debt will provide much-needed relief for millions of indebted Americans.

But critics have raised various concerns about Biden’s plan, such as whether his executive order goes beyond the powers of the president.

Some detractors have suggested that writing off student debt will further spur inflation, which reached its highest level in decades last year.

Others say the plan is too costly and burdensome for taxpayers. Last year, the non-partisan Committee on a Responsible Federal Budget found that over time, the plan “is likely to cost an astronomical $400-600 billion.”

With mail wires