Nobody has yet come up with a definitive estimate of the full taxpayer cost of President Joe Biden’s student loan bailout, but the numbers are already staggering. And as budget-busting as this one is, it’s only whetted the Left’s appetite for more loan bailouts.
The Congressional Budget Office released a cost estimate for Biden’s loan cancellation executive order. He plans to forgive $10,000 in federal student loans for borrowers who earn less than $125,000 a year. Low-income Pell Grant borrowers are eligible for an additional $10,000 cut. The CBO figures this will cost $400 billion over the next decade. Plus another $20 billion in costs by the extension of Biden’s “emergency” payment suspension through the end of this year – a suspension allegedly in response to COVID, which Biden himself says is no longer a pandemic.
That is close to the estimate that the Wharton school produced in late August. It pegged the 10-year cancellation cost between $469 billion and $519 billion.
But that’s only a small part of the taxpayers’ largesse Biden wants to shower on college students.
As the CBO notes “The estimates presented here do not include any effects of the actions affecting income-driven repayment plans.”
If anything, that will cost taxpayers more than the cancellations. Biden wants to vastly expand this escape valve for student loans. As it stands, students have the option of capping their loan payments at 10% of their income, and any debt left over after 20 years will be forgiven.
Biden would cap loan payments at 5% of income and forgive anything left over after just 10 years. Not only that, his plan would vastly expand what borrowers could exempt when calculating their income.
This deal will be hugely popular with students, since they could borrow money knowing that they’d only have to pay back a tiny fraction. Wharton figures it could cost $450 billion over the next decade. But it’s likely to cost more, not only because students will flock to this unbeatable deal, but because it is sure to fuel an even higher inflationary spiral of college costs.
Even the left-leaning Brookings Institution says it’s a terrible idea. “This represents a radical change in student lending,” writes Adam Looney. It will, he explains, draw in many students who otherwise would not take out student loans by making them “the preferred option for most students, and by a wide margin. Get 50% off the cost of college! But only if you pay with a federal loan, because you don’t have to pay it all back.”
Plus, he points out, it will in effect subsidize diploma mills because “programs that leave students without a degree or that don’t lead to a good job will get a larger subsidy.”
From an economic perspective, it’s lunacy. From a budget perspective, it’s reckless. From a moral perspective, it’s disgusting.
But as bad as this is, it would only be the beginning.
Already, advocates are mounting a campaign to have Biden cancel medical debt. Kaiser Health News published a piece complaining that with all the focus on student loan debt “little public attention has been focused on what is — statistically, at least — a bigger, broader debt crisis in our country: An estimated 100 million people in the U.S., or 41% of all adults, have health care debt, compared with 42 million who have student debt.”
An Insider article makes it clear where this is heading: “Biden made a major dent in the student debt crisis,” it says, “and it’s time he does the same for the growing medical debt load in the U.S., attorneys and advocates say.”
If Biden gets away with this student loan bailout, what’s to stop the White House from drawing up an executive order for him to sign that would forgive medical debt, credit card debt, heck any and all debt. All conveniently timed for the 2024 election?
— Written by the I&I Editorial Board
That is one of the advantages of an executive branch dictatorship, where the legislative branch (congress) is a useless appendage. Joe Stalin or Joe Biden, what’s the difference?
Yes, we’re on the way to the Weimar Republic or Venezuela – take your pick!
Congress delegated the authority to cancel federal student loans to the president. While some could incorrectly argue that such delegation is impermissible under the Constitution, President Biden had a legal basis and mechanism for cancelling student loan debt. The same cannot be said for medical debt held by private providers or state government providers.
To answer the question posed, President Biden would have no legal authority to effect medical debt cancellation. If he tried, which he wouldn’t, then the debt holders would sue, and win, to prevent interference in their contractual relationship with their patients. To the extent some Democrats would want to do an end around via the tax code, that would require Congressional action. Neither this Congress nor the post-midterm election Congress, is going to do that.
Pure dis-information! Even Nancy Pelosi thought not. Student loan authority (the purse-strings) was never specifically “punted” by Congress to Biden. COVID emergency authority is being claimed to give the executive branch unlimited dictatorial power. Following the same logic, COVID-caused economic hardship could be cause/excuse to dismiss automobile loan debt, mortgage debt (held by the Fed and quasi-federal agencies), as well as medical debt. Maybe even credit card debt. Tough luck for debt-holders, just like it was tough luck for small businesses shutdown while Big Box stores stayed open. If the student loan stunt is successful at winning the midterm elections: Expect debt cancellation to become a regular pre-election “emergency”. Vote buying in the tradition of Julius Caesar.
So congress punted the potato to potato head, since he is widely viewed as inconsequential and apparently can’t think for himself so does whatever he’s told to do.
The real reason for promoting the abdication of personal responsibility is the furtherance of Plutocratic Socialism: give the gullible and whining masses free stuff and trinkets to keep them amused and quiet, while you increasingly plunder the coffers to your own benefit.
Quos deus vult perdere, prius dementat.
My hope is Biden’s student loan transfer plan will be challenged in the courts & eventually shown to be illegal. However, from a political standpoint, it’s been calculated for max impact on the midterms. Any legal decision on its constitutionality would almost certainly come post Nov.
Socialist Biden’s goal is the permanent take over of our country, and he is using taxpayer money to buy votes to achieve his goal.
One debt class that will never be cancelled is legal debt…debt for fines and, or attorney’s fees.
It’s just plain old vote-buying.
It’s just plain old vote-buying.
Sounds good. We’ll cancel all the unsecured debt, destroy the economy, and then just wait for collapse.
“An estimated 100 million people in the U.S., or 41% of all adults, have health care debt, compared with 42 million who have student debt.””
Wait, didn’t obamcare fix that?
How about my mortgage too?