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Biden’s Loan Forgiveness Fraud

His popularity flagging, President Joe Biden is using the oldest trick in the book to return voters to the Democrats’ fold: Don’t earn their future votes, buy them. And that’s exactly what Biden is doing with his $1 trillion plan to “forgive” student loans.

Biden had already allowed students to “postpone” paying their loans during the pandemic “emergency,” even those who have jobs and could make the payments.

So why now forgive the loans? The truth is, one of the biggest recent declines in Biden’s support comes among Americans of college age and slightly older, the very group most likely to have a pile of student loans.

What better, or more cynical, way to revive their flagging political support than to bribe them with a “free” education?

Hard-left Democratic Rep. Ayanna Pressley called Biden’s plan “a tremendous victory.” In fact, it is yet another betrayal of working Americans who will now be paying taxes to support rich kids’ higher education.

That’s not hyperbole. If anything, it’s understatement. As a devastating University of Chicago study conclusively shows, wealthy families disproportionately benefit from loan forgiveness programs.

A recent Fox News report summed up the study’s findings: “The top 30% of households would receive almost half of the total dollars of forgiven debt, while those in the bottom half would get a quarter of the money. And the top 10% of earners would get $5,944 in forgiveness (in today’s dollars) while those in the bottom 10% would get $1,070.”

Sound fair to you? And that was for a much smaller forgiveness program than the one now envisioned by Biden.

Congratulations, suckers. You’ll pay for it, not “the rich.”

Sure, the White House tweaked its plan and is now “considering excluding high earners,” but it’s still a massive giveaway to those who occupy the top end of the income scale: that is, college graduates. After an initial negative public reaction to his loan forgiveness scheme, Biden is  reportedly considering forgiving at least $10,000 per borrower, while “limiting” the relief to undergraduates who earn less than $150,000 a year individually, or up to $300,000 as a couple.

Sorry, but gainfully employed people who earn six figures should not be having loans forgiven. They should be paying off their debt, as they promised to do when they borrowed the money. Otherwise, we’ll have a situation of what economists and bankers call “moral hazard” — the incentive borrowers have to renege on future debts if they think someone else will be forced to pay them.

That’s precisely the situation that Biden’s plan would create. And it would raise the cost of credit to everyone, including you.

And if we’re going to give students a break, why not forgive the credit card debt or mortgages of plumbers, construction workers, grocery store clerks and others in the blue-collar sector, too? Don’t they deserve forgiveness? After all, they fix your broken pipes, build your homes, bag your goods, and pay their taxes, all without giving you a smug lecture on Critical Race Theory or asking you to “check your privilege.”

Don’t they also deserve some “forgiveness”?

Worse still, this is all being planned by Biden on the supposed authority of the Higher Education Act of 1965, which is largely responsible for the surge in college costs. But, as Power Line’s John Hinderaker (an attorney himself) notes, nowhere in that landmark piece of legislation does it give the government power to forgive debts.

What Biden is proposing is, as Hinderaker rightly puts it, a “patently illegal action in order to buy votes.” Even Biden himself, way back in 2020, admitted it was “pretty questionable” whether he could do such a thing.

Meanwhile, just as bad, Biden’s plan is a handout as well to poorly run colleges and universities that have become fat, lazy, and wasteful thanks to massive education subsidies that lead to soaring costs for education and no incentives to reform.

A strong case can be made that there should be no federal aid for education at all. Let student borrowers decide whether the education is worth it or not, rather than sticking taxpayers with the tab after the fact. Students will take their studies far more seriously if they know they’ll pay for it.

Biden’s student loan forgiveness is a bad idea from a politically desperate president. We hope it will be legally challenged and struck down in court as an illegal exercise of presidential power. If not, you’ll just have to add this to the growing pile of Biden’s messes that the next president will have to clean up.

— Written by the I&I Editorial Board

 

 

 

 

 

 

 

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I & I Editorial Board

The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.

8 comments

  • Better yet: claw back payments from colleges who sold students a raw deal. Especially those who never earned a degree yet are saddled under thousands in debt.

    • Or make the colleges give out the loans so when the worthless degree recipient fails at earning a living the college is the one who suffers.

  • Yes, clearly the schools themselves, have no “skin in the game”. They win no matter how ill prepared they leave your children at graduation. No accountability is not a solution.

  • Politicians told us that they had to wrest student loans from private agencies because profit was happening. So now the politicians wrest money from taxpayers and give it away to upper middle-class voters. Theft is okay. Profit? No.

  • If you tracked the tuition of a typical student loan eligible college against time, once you mark the major student loan program improvements on the horizontal time axis, you observe a remarkable correlation with subsequent jumps in the cost of tuition.

    This is not a coincidence.

    In fact the wages of the faculty deans and tenured profs typically align very well with improvements in student loans access.

    It’s the usual inflation problem you normally associate with money, in this case you are creating degree inflation. PhD’s in social science or art history for example, sound awesome, but very few will get to work outside of teaching the next batch of students saddled with large student loans with diminishing ability to find employment to pay off the loans.

    In the case of future doctors and lawyers (or even bartenders who win a congressional race), if you make a decent salary, you have no right to ask families working in blue collar jobs who didn’t make the same choice to get those degrees by taking on large debts.

  • My guess is that Biden knows this proposal will immediately end up in the courts, in which case he can point to the ‘heartless Republicans’ as being to blame.

  • We have a polity now that gangs up on Republicans and center-right independents who constitute about half of the electorate. This gang is suffused with certainty, with the self-assurance of the possessed and the hubris of a religious know-it-all. Democrats have brought disparate elements together – academics, mainstream media, social justice warriors, minority opinionators, leftist college students, abortionists, unionistas, southern border absolutists – and forged a juggernaut that stifles news if it disfavors the liberal perspective. This is, of course, anti-American and anti-democratic, for it silences much of the public square, thus ignoring relevant news that is required for an informed electorate. Democrats in high office stabilize the gang by propagating features of the progressive zeitgeist, like student loan forgiveness, which are wildly popular to gang members. We must contest these authoritarians by registering to vote and pursuing a rational, purposeful and knowledgeable course.

  • If that is to be the case, then I can finally get on board with reparations regarding “injustices” of the past. I graduated college in 1989 and would like my expenses refunded to me. And while we’re on it, my mortage, and auto loans are just that…loans. I’ll have those forgiven as well. Let colleges and universities pay for it, they sit on billions in endowment funds, and they created the situation by setting the cost.

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