Allegedly, our vegetable-in-chief is pondering some sort of executive order that would discharge part of the student loan debt held by the government. How much debt would he be forgiving? Who’d be eligible? We don’t know for sure. Amounts from 10k-to-50k have been tossed around. Since this is a terrible idea being pushed for purely political purposes, the high-end number would make more sense from that perspective:
At a press conference last week, Biden said he wasn’t considering canceling $50,000 in student loans, which had been the amount of relief requested by many advocates and some Democrats, including Senate Majority Leader Chuck Schumer of New York.
…Cancelling $50,000 for all would cost around $900 billion and leave 80% of current federal student loan holders with no balance, according to a recent study by The Federal Reserve Bank of New York.
If Biden remains uninterested in moving ahead with that larger amount of forgiveness, it’s unclear what number he might settle on. On the campaign trail, he came out in support of removing $10,000 from people’s balances.
That would wipe out $321 billion of federal student loans and eliminate the entire balance for nearly 12 million people.
Around 70% of student loan borrowers, however, would still be left with debt.
If Biden goes with a lowball number after people like Chuck Schumer have been calling for 50k, he may end up annoying his base AND outraging everyone else. Not the smartest idea, but then again, even in his prime, Joe Biden was not the smartest guy, so we’ll have to see what happens. Whatever the case may be, the next step will be to fight it out in the courts. Would he win that? That’s difficult to say definitively, but we should hope that he doesn’t, because at a minimum, an idea like this should have to get a thumbs up from Congress to become law.
Whatever the case may be, as with so many questions we’re faced with in modern society, the more pertinent question is not “can he do it,” it’s “should he do it?”
If you’re a responsible person who cares about what’s good for the country, the answer is “no” for a wide variety of reasons.
Just as a starting point, what we’re talking about here is a gift for some of the most “privileged” Americans mostly at the expense of people that will make less money than they do:
Finishing high school puts workers on track to earn a median of $1.6 million over their lifetimes, compared to $1.2 million if they had not graduated.
Those with some college earn $1.9 million during their careers and associate degree holders earn a median of $2 million over their lifetime.
A bachelor’s degree holder earns a median of $2.8 million — 75% more than if they had only a high school diploma — although when broken down by gender, women with a BA have median lifetime earnings of $2.4 million, compared to $3.3 million for men.
Those with a master’s degree earn a median of $3.2 million over their lifetimes, while doctoral degree holders earn $4 million and professional degree holders earn $4.7 million.
When we’re talking about the government “forgiving” student loans, what we are in fact talking about is the American taxpayers, most of whom never went to college (about 58% above 25 have no degree), taking on more collective debt to pay for someone else’s college education.
They get the benefits, and you get the bills.
It’s also worth noting that people go into debt for all sorts of reasons. What makes this one so special? Why aren’t home loans, auto loans, credit card bills, investment loans, and business loans just as important? For that matter, why shouldn’t I just be able to buy guns with credit and have the government pay for it? Is this our future? Different politicians offering up trillions of dollars in borrowed money to different constituency groups as an election rolls around? If that is the future – and maybe it is – it just makes it much less likely that a country as deep in debt as we are today will survive long term.
Also, what about the people that already paid back their college loans? Is the idea here basically supposed to be, “Screw you for being responsible?” Is that really the message we want to send to them? Perhaps even more importantly, is that the message we want to send to all the people going to college now? Do we really want them thinking, “Only a sucker pays off their college loans since, if I wait long enough, some politician will just forgive it down the road?” For that matter, why bother serving in the military to get tuition assistance if the government is just going to give it to you anyway?
On top of all that, if you think a college education is too expensive, this will only exacerbate the problem. Why shouldn’t colleges pay top dollar for every professor, pad their payrolls with unlimited administrative flunkies, and charge as much as humanly possible if Big Daddy government is simply going to pay whatever you charge? If we think college is too expensive, why not force all the public colleges to take the same kind of haircut we just gave to landlords during the COVID pandemic? Tell them something like, “We don’t think the degrees you’re giving out are worth what people are paying for them, so any money people still owe you from the last twenty years or so, you’re just going to have to eat.” Does that sound outrageous to you? Of course, it is, but it isn’t any more outrageous than asking the rest of the American people to pay for it.
It’s one more step down that ugly road Alexander Fraser Tytler described so long ago:
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.”
I have graduate and undergraduate degrees and even though I worked while also attending classes, I had $26K in debt. It took me about 11 years to pay it off. If you've been to college, you all know people who were on the "6 year plan", or "8 year plan", or "xx year plan," because they didn't want the parties to end and the real world to start. Would those type of guys love this idea, or what? I was ticked at the unfairness of means testing for Pell grants and scholarships, because my middle-class parents' income was imputed to me, and no one cared that my grandparents had not paid their way through school, so they refused to pay for mine. If this loan forgiveness is not means tested, what a joke that would be! If your parents did a 529 plan for you, then you don't have loans, and you don't get a penny forgiven. If you worked through school, and have very little student debt, you get very little benefit. You max out your loans, leave school owing $50K, and poof, it's gone, well how about that for an incentive? This is such dumb pandering Biden ought to be ashamed of himself, but wait, these are Democrats so that concept does not apply, it's all about votes. I hope they try to do something like this, so the 87% of people who don't have student loans will react to having their taxes siphoned off by people who chose to take out these loans and now want someone else to repay them.