| John, this summer, the Biden Administration lost.
You may remember, the Supreme Court struck down Biden’s unconstitutional plan to forgive student loans.
But then, the Biden Department of Education finalized new rules for student loans subject to income-driven repayment.
The administration is engaged in false marketing when they trumpet their new student loan program as an income-driven “repayment” plan.
It’s still a cancellation plan, because many borrowers will pay $0 a month toward their loans until the balance is forgiven.
The Biden administration fails to explain that those lower payments made by borrowers will result in taxpayers covering the difference!
According to a Penn Wharton Budget Model report, the difference will amount to an estimated $475 billion over the next 10 years, with a higher-end estimate coming in at $558.8 billion.
This newest attempt to shift the cost of college from borrowers to taxpayers is another bad policy idea that fails to address the underlying causes of the student loan crisis: soaring costs.
Since 1980, tuition has increased more than six times the rate that the average income has grown. This new policy will be one more failed taxpayer-funded subsidy intended to make college more affordable but with the opposite effect.
This rule does nothing to incentivize institutions to reduce tuition or change borrowers’ behavior. The federal government’s heavy-handed role in financing higher education correlates with soaring college costs over the past four decades.
Instead of strengthening the government’s role in an already broken system, lawmakers should address the misaligned incentives that result from bureaucrats and institutions limiting students’ access to individualized education options.
They can do this by ensuring higher education funding, such as Pell Grants, goes directly to students, not education providers. That way students can make true trade-off decisions between college and alternatives in a robust postsecondary education marketplace.
Best,
- Akash
Akash Chougule
Vice President of Government Affairs
Americans for Prosperity |
