Aug. 25, 2022
Permission to republish original opeds and cartoons granted.
Student Loan Cancelation Part of the Fundamental Transformation
By Rick Manning
President Joe Biden’s decision to transfer some $300 billion of voluntarily acquired student loan debt to the backs of taxpayers is a slap in the face to Americans who did not choose to go to college or made college choices which left them unencumbered by debt.
One of the reasons the left loves big government is it gives them the power to pick winners and losers. And it should not be any surprise that the winners of Biden’s student loan disappearing act largely voted for Biden, while the losers did not.
The 25-year-old who bought a used Ford F-150 work truck and is making five year payments on that $25,000 job necessity doesn’t suddenly find the truck paid for. Rightfully, they have to make their payments and keep their contract. But if the same 25-year-old had gone to college and used student loans to help pay for a psychology degree, would find as much as $20,000 of their debt absolved.
From a philosophical perspective, training those who are most likely to rise to political power that paying their personal debts don’t matter and waiving those debts can be used as a political tool is disastrous for a nation that used to believe in equal treatment under the law.
From a practical perspective, if political whining can get student debt reduced, then why not also arbitrarily absolve homeowners of their mortgage payments, or just end the notion of our current bankruptcy laws and just let everyone walk away from all their debts? After all, it’s only owed to the bank. The ramifications would be the end of consumer capital being available as only a fool would loan money when the government creates an expectation that it need not be repaid.
From a political perspective, those who want to expand big government providing a magic wand dissolution of debt to middle and upper middle class America creates a legitimate market for unlimited government power exercised by those with the power against those without it. This makes it much more difficult for people to embrace limited government, when they were the beneficiary of an arbitrary big government overreach.
A decade ago, this would be a fight over the arbitrary exercise of power by the Executive Branch without gaining congressional approval. It would be a fight over whether the federal government should even be in the student loan business beyond the role of guaranteeing them so they would be made available by financial institutions. And it would be a fight over why the cost of higher education has skyrocketed, while the results produced have diminished.
Today it is a fight over whose ox got gored as winners and losers where picked by the President with little to no recourse for the losers.
Big government begets more big government. And the more people get “free money” whether it be in the form of helicopter payments with Covid as the excuse or sprinkling fairy dust on the student loan balance sheets and making debt disappear without showing where it reappears on the national debt, big government excels at perpetuating itself.
After all, for those who made the mistake of paying off their loans, or didn’t get loans at all, you just had hundreds of billions of dollars more added to the national debt – a ticking time bomb that the left believes, with no historical evidence, will never explode.
Rick Manning is the President of Americans for Limited Government.
To view online: https://dailytorch.com/2022/08/student-loan-cancelation-part-of-the-fundamental-transformation/
Video: Joe Biden's Student Debt Cancellation Picks Winners and Losers. Blue Collar Workers Lose.
To view online: https://www.youtube.com/watch?v=lCd0z75Luxs
Neal McCluskey: Biden Student Debt Cancellation Proposal: Even Worse than Expected
Yesterday, I assembled my top five reasons to oppose mass student debt cancellation in anticipation of the Biden administration announcing a plan today. The plan is somewhat different from what I expected, and worse than I feared.
All but one of my reasons yesterday applies to the proposal the White House put out today. Number two – cancellation would be skewed to higher‐income borrowers – no longer applies.
As expected, Biden will cancel $10,000 for all federal student debtors up to joint filers earning $250,000. That includes, by the White House’s own admission, basically all but the 5% of top‐earning households. The big addition is that Pell Grant recipients who also have student loans will get up to $20,000 in debt cancelled. Based on a very rough, preliminary estimate of the share of student debtors who received Pell and their earnings, that changes cancellation from disproportionately helping higher‐income debtors to lower.
Meanwhile, my rough new estimate is that the cost to taxpayers will be $427 billion. To put that in perspective, it is more than the gross domestic product of Hong Kong and 182 countries. For those who support federal social programs, it is nearly 36‐times greater than the federal government spent on Head Start in 2022. And if you support defense spending, it is nearly two‐and‐a‐half times larger than the U.S. Army’s 2022 budget. And this, by the way, does not include non‐cancellation elements of the Biden announcement, including proposals to significantly cut many borrowers’ monthly payments and more generous loan forgiveness in the future.
The other major objections to cancellation still apply.
First, people who go to college, and especially who get degrees, typically garner big earnings increases – $1.2 to $3.1 million over a lifetime – and job security that makes them among the least in need of help. And remember, student loans are a much bigger part of how people pay for graduate school than undergrad.
Second, massive debt cancellation will encourage even greater college price increases as schools and future borrowers will both expect more cancellation in the future. Naturally, the White House cited the incredible rise in college prices to justify mass cancellation without acknowledging the huge role aid has had in it. Never owning the problem you largely created is the federal government way!
Last, but absolutely not least, this is grossly unconstitutional. Congress, not the president, has the spending power, and there is no rational way that declaring a loan a grant is anything but spending. Of course, there is also no constitutional authority for these programs in the first place.
The major reasons to object to mass student debt cancellation might have changed somewhat from yesterday, but that doesn’t make cancellation any better. Indeed, what the Biden administration says it will do is worse than expected 24 hours ago, especially for the Constitution, federal taxpayers, and future students hoping for reasonable college prices.
To view online: https://www.cato.org/blog/biden-student-debt-cancellation-proposal-even-worse-expected