Pstudent loan from resident Joe Biden
plan is a blatant redistribution of wealth. The plan would provide “debt cancellation” (i.e. a taxpayer-funded bailout) of up to $10,000 for borrowers earning less than $125,000 and up to $20,000 for beneficiaries of the Pell grant. The White House says this plan will cut costs by up to
with student loans and cancel the total balance of about 20 million of them.
Besides being unfair and a blatant political ploy to buy votes just before the November election (which is already backfiring), there is the question of whether the annulment is constitutional. Several attorneys general are
plaintiffs to challenge the plan.
And more than two weeks after the plan was announced, the White House still cannot offer a price, saying it depends on how many people apply for the bailout. However, respected outside economic forecasters do not have this problem. According to Penn Wharton’s budget model, the Biden bailout could
up to $1 trillion and would massively benefit households in the top 60% of incomes.
Biden’s Education Secretary Miguel Cardona defended the plan as a necessary step to ensure everyone has a “head start in ensuring a bright future.”
“For too many people, student loan debt has hampered their ability to achieve their dreams, including buying a home, starting a business, or supporting their families,” he said. “Getting an education should set us free; not tie us up! …Today we are delivering targeted relief that will help ensure that borrowers are not put in a more difficult financial situation because of the pandemic and restore confidence in a system that should create opportunities, not a debt trap.
There are several problems with this delusional statement. The secretary admits that the university is tying up students and causing a “debt trap” because it’s too expensive. But the decision to repay $10,000 in loans will only encourage colleges to charge more, perhaps hoping the government will continue to take on more of the debt it gives students.
With federally guaranteed loans, universities and colleges don’t have to compete with each other to cut costs or provide a higher quality education. Indeed, the college loan game perpetuated by the government is perhaps one of the greatest scams in history. A 2021 Skilled Trades Report
that the cost of attending two- and four-year institutions has risen more than 300 percent, adjusting for inflation, since 1980. As the U.S. government continues to pump dollars into higher education through through subsidized student loans, the cost will continue to rise.
The government only knows
students pursuing higher education will graduate, but they will continue to lend to anyone with a pulse, which is the root of the problem. Stricter parameters should be established to limit taxpayer funding of dropouts and those studying subjects for which there is no demand in the labor market.
If it’s not worth it for the students who took out the loan to pay it back, it certainly isn’t worth it for their neighbors, who are now expected to help them pay it back. No one expects anyone else to pay off their mortgage, car, or other voluntary loan, and student loans should be treated no differently.
Biden’s attempt to do just that is particularly offensive to the tens of millions of people who have made the difficult choice of paying off their debt themselves or forgoing debt altogether. America is a free country, but personal responsibility is fundamental to keeping it that way. Canceling student debt undermines this principle and rewards our worst impulses. Hardworking people deserve better, and they will remember that on Election Day.
Christina Smith is director of health and science policy at Citizens Against Government Waste.