Dr. Beth Akers, a senior fellow at the American Enterprise Institute, said the Department of Education was not “transparent” about how much Americans would pay in the face of student loan forgiveness.
The Biden administration has been speculating for several months that it will soon announce plans to cancel a significant amount of student loan debt for more than 40 million Americans with federal college loans.
Exposed to numerous crises and an awful number of polls, the administration is likely to postpone the announcement until the autumn elections, hoping it will increase voter turnout among students and recent college graduates and help Democrats prevent political Armageddon. Whether this expectation is realistic, given the current level of inflation – which may soon bring many Generation Z members back into their parents’ basements – is debatable, so I will leave such speculation to others.
Several other considerations are more important, such as the following: loan forgiveness is likely to be illegal, immoral and unfair, would weaken already shaky public finances, and makes no sense.
Before we go any further, it is important to note that the Biden administration imposed a moratorium on interest fees on about $ 1.6 trillion in student loan debt in March 2020 and essentially told borrowers that there were no financial consequences. from not making regular payments – even when employers are struggling to fill more than 11 million available jobs. Not only that, as a result of inflation, the cost of repaying existing loans has decreased; a dollar borrowed a year ago can be repaid with a dollar today, which in real terms costs less than 92 cents. In addition, a large number of other borrowers, such as those with loans from non-existent Corinthian Colleges, have been told that their debt has been completely canceled.
REPUBLICAN HOUSE TO INTRODUCE NEW BILL TO BLOCK BIDEN STUDENT LOAN RELIEF
Dartmouth College student Kavia Nivarti discusses her opposition to canceling student loan debt and describes alternatives to a 4-year college degree.
So it’s not as if tens of millions of students and recent graduates have to choose between paying off their student loans and meals. This is not the case at all.
However, my other fears are real.
It may be illegal.
I am not a lawyer, but it seems incomprehensible that the cancellation of the debt will be considered legal if it is challenged in court. The current federal direct loan program was established by an act of Congress (Public Law 111-152) and signed by President Obama. There is no provision in the law that explicitly gives the president broad freedom to change the program, such as eliminating the repayment of the loan. To assume such unilateral power, the president will act in the manner of King Louis XIV (“I am the State”), not the head of a government governed by the rule of law.
This is immoral and unjust.
Is it morally correct to say to some borrowers, “You have to repay your loan with an interest rate of X percent,” while you say to other borrowers, “You are excluded.” This seems especially wrong when many of those who repay their loans will live frugally to do so, while many of those who are told to neglect their obligations (think lawyers, MBAs and other well-paid professionals) already live comfortably. Is this the new definition of fair? Does modern American society reward those who neglect their legal obligations?
Rick Crawford, a member of the House Committee on Agriculture, is discussing the president’s plan to cancel a student loan debt in the Evening.
This is financially irresponsible.
My rough estimate is that the moratorium on interest payments on student loans alone in the 28 months since the beginning has reduced federal revenue by more than $ 200 billion. That’s at a time when federal debt exceeds $ 30.5 trillion. Even a modest student loan forgiveness program is likely to include $ 400 billion to $ 500 billion in additional lost government revenue. Someone, one day, has to pay these debts, unless some future administration decides not to fulfill the obligations of the government or, perhaps more likely, to reduce their size through deliberate inflation, as I mentioned earlier.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
There’s no point.
Does it make sense to burden hundreds of millions of Americans who live from paycheck to paycheck, many of whom have not had the opportunity to go to college (or have chosen not to) to save student borrowers, many of whom are coping pretty good financially, some with a six-figure income? Is it reasonable to subsidize higher education, which has been increasing its costs for decades until it fails to complete a majority of undergraduate candidates within six years? I don’t know about you, but I don’t.
GET FOX BUSINESS ON THE MOVE BY CLICKING HERE
This is not about helping students. Then why would the administration do that?
A very plausible answer: higher education is an ardent ally of the progressive elements within the Democratic Party, providing significant financial support, ideas and staff. So this is a way for the administration to buy votes while paying its loyal supporters in academic and activist communities.
Richard Veder is a Senior Research Fellow at the Independent Institute, Auckland, California, Honorary Professor of Economics at Ohio University and author of the latest issue of Restoring the Promise: Higher Education in America.
Add Comment