Though Joe Biden often has proclaimed that the US government should “forgive” student loan debt, he appears to be taking a more subtle – some might call it slippery – approach to putting taxpayers on the hook for the $1.6 TRILLION in outstanding student loans that college students and grads owe the feds.
According to the Washington Post, President Joe Biden will not include any student loan cancellation in his annual budget. While the annual budget, which is expected at the end of next week, only contains major policy plans that have already been released by the Biden administration, it’s another major setback for student loan cancellation. As a presidential candidate, Biden called for Congress to cancel up to $10,000 of student loans for student loan borrowers, but hasn’t enacted any policy for student loan cancellation through an executive order.
Of course, as usually is the case when looking at long-standing government intrusions into what is supposed to be market activity, this “federal college loan forgiveness” requires some proper unpacking.
The first load to unpack is the improper position of the federal government as a supplier of college loans, and to help expose the unconstitutional, immoral, activity one can refer to Daniel Kowalski’s coverage, for the Foundation for Economic Education:
Student loans did not exist in their present form until the federal government passed the Higher Education Act of 1965, which had taxpayers guaranteeing loans made by private lenders to students. While the program might have had good intentions, it has had unforeseen harmful consequences.
And Kowalski correctly points out what those familiar with economics, government subsidies, and moral hazard know…
This fueled demand for the higher education business, where existing universities and colleges expanded their academic programs in the arts and humanities to suit students not interested in math and sciences, and it also led to many private universities popping up to meet the demands of students who either could not afford the tuition or could not meet the admission criteria of the existing colleges. In 1980, there were 3,231 higher education institutions in the United States. By 2016, that number increased by more than one-third to 4,360.
And the US has increased the yearly and total amounts that students can receive in loans. In the 1980s, the total was $2,500 per year over four years. But that’s jumped to $12,500 annually and $57,500 total, while grad students can borrow up to $20,500 annually and $138,500 total, incorporating their undergraduate loans.
All of which has seen a spike in college charges, or, as Erik Sherman reported in September:
The average cost of attending a four-year college or university in the United States rose by 497% between the 1985-86 and 2017-18 academic years, more than twice the rate of inflation. The cost of attending a traditional four-year university has been rising more than twice as fast as inflation, and two-year community colleges a third faster.
And, though bleeding-heart pop reporters might not mention it, President Obama ALREADY “forgave” a huge swath of college debt owed to the feds. In other words, they already put taxpayers on the hook.
It started with Obama’s announcement of the “PAYE” or “Pay As you Earn” change in the way the unconstitutional Department of Education would handle repayment of federal college loans. In a change announced in 2011 and implemented in December of 2012, this Executive Branch action saw the feds cap yearly repayments of ten-year college loans for single people at ten percent of the debtor’s annual gross income. But that wasn’t enough for Obama, so in 2014, he announced an expansion to his original re-work – and this was an expansion that actually saw a cut-off point beyond which loan recipients would no longer have to pay a dime.
Teachers can have their balance canceled after ten years, for example. Low-income borrowers can have their balance canceled after 20 or 25 years of on-time payments.
So, despite all the “forgive college loan” rhetoric, you’re already on the hook. The point today is that Biden and the Dems on Capitol Hill want to lay more of other people’s debt on your shoulders, and, because the feds are in deep, deep debt, on the shoulders of people not yet born.
Biden merely is shifting the procedure to complete this, turning away from doing it through Executive action via the unconstitutional Department of Education, and focusing on Congress, and its fake mantel of “by the people, representative government” to pass another unconstitutional statute on top of the already unconstitutional college loan paradigm that began in the 1960s.
It’s coming. Beware.