Christmas came early this year for millions of Americans.
President Joe Biden, acting in his own right without authorization from Congress, announced a plan to forgive up to $20,000 in federal student loans from borrowers.
Of course, taxpayers are the ones left to pick up the costs, with most experts expecting the plan to reach upwards in the hundreds of billions of dollars.
While Mr. Biden’s plan is fiscally irresponsible, especially when the nation seems to be barreling toward recession, it’s also blatantly unconstitutional.
Like it or not, Congress maintains the "power of the purse," with the executive branch directing the way funds are spent.
Even leaders in Mr. Biden’s party recognize this precedent.
As U.S. House Speaker Nancy Pelosi pointed out in 2021, "People think that the President of the United States has the power for debt forgiveness.
"He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress."
More importantly, Biden’s debt forgiveness scheme fails to address the real problem plaguing higher education: Why has a college degree become so expensive to obtain?
In the past 20 years, the cost to attend college has greatly outpaced inflation.
This has resulted in tuition and fees at private universities climbing 134%, while out-of-state tuition and fees at public universities have jumped 141%.
To make matters worse, in-state tuition and fees at public universities, institutions that were designed to be affordable and accessible for in-state residents, have risen by a whopping 175%.
With inflation remaining at its highest level in 40 years, there isn’t a reason to think that tuition costs won’t continue to rise at such a rapid pace.
Sure, Mr. Biden’s loan forgiveness plan will benefit millions of current and former students, but what about future undergraduates?
Biden’s unilateral action could very well persuade prospective college students to assume more debt, with the assumption that such debt will be forgiven by a future administration.
Meanwhile, colleges will continue to raise tuition at steep rates, as they’ll have little incentive to invest in more cost-effective degrees since students will be willing to continue to take out debt.
And then there are the millions of Americans who decided not to attend college, as well as those citizens who saved and worked their way through school, graduating debt free.
Why should an auto mechanic or beautician subsidize a Wharton graduate who is set to make over six figures in their first job out of college?
It’s simply unfair to expect either group to pay for the educations of surgeons, hedge fund managers, and some of the highest paid professions in the nation.
In Biden’s plan, individuals making up to $125,000 and couples with a combined income of $250,000 are eligible for loan forgiveness.
The median household income in the U.S. stands at $67,521. Yes, many people who will qualify for debt forgiveness will be considered middle class, but it doesn’t change the fact that millions of upper-income borrowers will simultaneously benefit.
Finally, Joe Biden’s plan is just plain bad economics.
Economists on both sides of the partisan divide, including many Democrats, are skeptical of any long-term benefits.
Jason Furman, former Chair of President Obama’s Council of Economic Advisers, noted "Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless."
The Committee for a Responsible Budget seems to agree with Mr. Furman, concluding "student debt cancellation would be an ineffective form of stimulus, providing a small boost to the near-term economy relative to the cost."
Couple the cost of the Biden loan forgiveness program with the money that has already been spent by the government since the COVID-19 pandemic began, and it’s easy to see why inflation is reaching record levels with no end in sight.
The national debt stands at tens of trillions of dollars, and rather than attempting to reduce that debt, Mr. Biden and his administration seems hell-bent on increasing it.
The student loan forgiveness plan will likely meet its doom at the hands of the courts, it sets a dangerous precedent for future administrations.
It sends a message that Congress should be bypassed on matters of national importance.
It sends the message that astounding sums of taxpayer money can be spent to subsidize the out-of-control costs of higher education. It sends the message that even if the current student loan program is clearly in need of long-term reform, it’s politically expedient to kick the can down the road.
It’s an early Christmas for some, and an extra Tax Day for the rest of us!
Jacob Lane is a Republican strategist and school choice activist. He has worked for GOP campaigns at the federal, state and local levels, as well as with various PACs and non-profits. Read Jacob Lane's Reports — More Here.
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