A curious thing happens to large portions of a populace after an unjustified and detrimental government program has operated for a generation or so. It turns out that many people argue only about the day-to-day workings of the program, and not the existence of the program itself.
In the United States, one of the most important examples of this phenomenon is the federal provision of undergraduate and graduate school loans. Today, many politicians – both Democrats and Republicans – cater to the whimsy of the “kind-hearted” by “nobly” claiming that the feds have to do something to “help” downtrodden college students and recent grads who are being eaten alive by exploitative college debt. Thus, we hear news about the $1.7 TRILLION in student loan debt as if it’s all of “our collective responsibility”, rather than a problem created by individual choice and political pandering.
Of course, when it comes to the “crisis” of student debt, not only have many Presidential administrations and Congresses “forgiven” huge sums of college loans and repeatedly not reminded the public of that debt shift onto OUR backs, they’ve insisted on avoiding the elephants in the dorm: the fact that there is no “college loan” power in the US Constitution, and the fact that government subsidies artificially increase demand for college educations, pushing up the prices of college educations and reducing the quality of same.
And now, Reason’s Mike Riggs tells us that the Biden Administration quietly has been using executive authority to carry out even more “student loan forgiveness.”
While progressive Democrats in Congress have yet to pass a universal student loan forgiveness bill, the Department of Education has nevertheless forgiven billions of dollars in federal student loan debt since Joe Biden became president. And even without new statutory authority, the federal government is slated to forgive increasingly more student loan debt in the future, thanks to the Biden administration's expansive interpretation of the Education Department's existing authorities, as well as a law signed by George W. Bush way back in 2007 that mandates loan forgiveness for certain borrowers.
And Riggs goes into excellent detail about just what the Bidenistas have been doing:
Let's start with the federal student loan debt forgiveness for low-income and disabled borrowers, which the Department of Education says has erased ‘$9.5 billion, affecting over 563,000 borrowers,’ since January 1, 2021.
That includes $1.1 billion in debt forgiveness to students who attended the now-defunct ITT Technical Institute.
It includes $1.5 billion in debt forgiveness to students who can convince the unconstitutional federal Department of Ed that schools “misled” them about their employment prospects upon graduation, the transferability of credits, “mischaracterized loans as grants,” or “engaged in misconduct in violation of state laws.”
And it includes $7.1 billion for “total and permanent disability discharges” if the loan recipients get termed “disabled” by the Social Security Administration (SSA – also not enumerated in the Constitution.)
How magnanimous. Now, you, and your kids, will be made to pay for someone else’s “higher education.”
But this isn’t anything new, as Riggs points out:
The above actions can be traced to the Biden administration's interpretation of a section of the Higher Education Act of 1965 that authorizes the secretary of education to ‘enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.’ The Education Department under President Donald Trump took a far more limited view of that authority, though it did use the law in an unprecedented way when it suspended payments and interest on federal student loans at the onset of the COVID-19 pandemic…
Of course, it’s not an “R versus D phenomenon.”
As I reported in 2017 for MRCTV, the US government handles virtually all college and graduate school loans, crowding out private lending that would be more attentive to loan safety and quality, and pushing up the demand for college education, which, as mentioned earlier, drives up college prices and lowers pedagogical quality.
And, also as I mentioned in that piece, the history of this US government involvement goes back more than half a century. It is important to learn this history, to know the actions politicians have taken that got us tax-serfs to this point. We got here:
(A)fter former President Dwight D. Eisenhower pushed the 1958 National Defense Education Act that handed colleges loans to let colleges, in turn, loan money to students (all in the name of “national defense”, of course), after the squeaky-clean Lyndon B. Johnson finagled the unconstitutional Higher Education Act of 1965 that started direct college loans called Federal Family Education Loans (FFEL), after Dick Nixon introduced Sallie Mae (the Federal Student Loan Marketing Association) to buy up student loans held by private banks, inspiring an even greater moral hazard of riskier loans, after the feds expanded student loans via Pell Grants in 1972, after Jimmy Carter signed the Middle Income Student Assistance Act of 1978, after Ronald Reagan and a “bi-partisan Congress” increased the number of Pell Grants and pushed government payments to universities by more than 30%, after George H. W. Bush signed into law the 1992 William B. Ford Direct Student Loan Program (part of the reauthorization of Johnson’s 1965 Higher Education Act), after Bill Clinton began phasing-in even more direct student loan lending, after George W. Bush exploded student loans in 2007, likening it to the ‘GI Bill’…
Of course, that’s only a partial breakdown of the unconstitutional pandering by politicians.
Barack Obama added to the mess by signing into law a bill that essentially allowed students to only pay back loans up to 10% of their income, and default on the remainder after 20 years.
And, as I noted in 2017, the same characters in the Obama Administration “mistakenly” did not report the fact that, on more than half of the student loans in default, the students had not paid back a single DOLLAR in seven years.
And, finally, there’s this:
As Jason Osborne of Credit Adjustment’s Inc., one of the largest student loan collections firms in the nation, notes, the Obama Administration actually counted these defaulting loans as assets in their overall deficit/debt numbers…
If a private institution did all this, its proprietors would be arrested and put on trial.
Yet the federal government continues to make us pay for indebted students, now, under the loving charm of President Biden.
And Americans don’t question the presence of the feds in this area. Decade after decade, this malfeasance not only has destroyed higher education, it has trained generations of American residents to expect federal involvement in college loans and grants when such federal activity is completely counter to the US Constitution. It has set up taxpayers to pay the bill when generations of kids attend ridiculous classes at artificially expensive schools and then the kids can’t use their hollow degrees to do productive work.
Is it any surprise that Biden would continue the trend?
Only when enough Americans learn the truth about the long history of US errors and malfeasance in the college loan field will any substantive change occur.
That’s an important lesson to learn.