Biden Wants Us to Foot Bill for Student Debt Forgiveness Votes

Less than two months before all-important midterm elections which are expected to set Congressional legislative agendas for the rest of his presidential term, Joe Biden has issued an executive action which his senior aides, including White House Chief of Staff Ron Klain, believe will be especially popular with young voters.

With a swift pen stroke, President Biden generously pledged have millions of taxpayers who never went to college — or did, and who painfully paid off their loan debts — pick up the tabs for others who will be excused from repayments.

Ironically, many recipients of such charity won’t even claim to be the neediest or downtrodden among us. Quite the opposite.

According to the Federal Reserve, fewer than 1 in 4 households have student-loan debt, and it is more common among those with higher incomes.

Much more of that aid would go to the highest quintile of earners than the lowest — $54.3 billion versus $33.8 billion. That’s because higher‐income people are more likely to borrow, and borrow more, for college than lower‐income.

There is no reason that people in such a good financial position should not repay taxpayers, roughly two‐thirds of whom do not have bachelor’s degrees.

Millions receiving the giveaways will go to those who borrowed to finance graduate degrees like JDs and MBAs — a group which will benefit from huge increases in their lifetime earnings.

As proposed, that plan which will forgive up to $20,000 in federal student loan debt for tens of millions of Americans, won’t come cheap. The University of Pennsylvania Wharton Budget Model estimates the scheme will cost taxpayers more than $300 billion over 10 years.

Biden said that he will cancel $10,000 in federal student loan repayments for borrowers making under $125,000 a year or married couples making less than $250,000 a year who include most of the 40 million people with student debt.

In addition, those who receive federal Pell Grants — a form of federal financial aid for undergraduate students received by about 6 in 10 of the borrowers — and make less than $125,000 a year would be eligible for total forgiveness of $20,000.

On top of that, the debt forgiveness applies, as well, to Parent Plus loans which allow millions of families to borrow money to cover the total cost of attendance—room and board, books and personal expenses on top of tuition — for as many years as it takes to get the degree.

Bear in mind that other young adults not attending college don’t expect the public to pay for their housing or food; neither should those enrolled.

Also, enrolled borrowers making less than 225% of the federal poverty line wouldn’t have to make monthly payments on their loans.

The proposed program applies to borrowers who took out federal loans by June 30 of this year in order to be eligible for forgiveness. Loans taken out after that date won’t be eligible.

Whether or not the Biden administration’s plan will be carried out will likely depend upon how courts would interpret the education secretary’s powers under the 1965 Higher Education Act (HEA), which allows the secretary to “consent to modification” of loans, and “compromise, waive, or release” unspecified amounts of student debt.

The HEA does not authorize blanket cancellation, only forgiveness under specific loan repayment programs.

The White House is basing its legal authority for cancellation in part on a COVID-19 national emergency, citing financial harms suffered by borrowers.

Speaking during a CNN town hall last year, even Biden has previously raised questions about whether he has power to cancel student debt on a large scale, stating: “I don’t think I have the authority to do it by signing with a pen.”

The Wall Street Journal has reported that some of Biden’s advisers also have privately raised concerns that broad debt forgiveness could face legal challenges.

The Constitution, above all, gives Congress, not the president, the power of the purse.

Accordingly, A president unilaterally cancelling up to $1.6 trillion would likely constitute a rank violation of that power.

GOP lawmakers have already introduced a House bill explicitly revoking the Education Department’s ability to cancel student loans by executive fiat, and we can fully expect that if Republicans retake Congress this fall, they will put student-loan reform at the top of the agenda.

The bill would also prohibit the department from forgiving more debt through modifications to repayment plans and cap new loans to graduate students at $25,000 a year.

In any case, whether it ultimately passes or not, the federal government is already on track to disburse $1 trillion in new student loans over the coming decade. The Committee for a Responsible Federal Budget estimates that it will take less than a decade for the outstanding stock of student loans to climb back to its current level.

As a four-year military veteran at the time, it still took me nearly five years to pay off my university loans. That was my responsibility alone.

We literally can’t afford to make Biden’s bailouts for politically privileged populations a precedent at the expense of the rest of us who are expected to fulfill our own fiduciary obligations.