by Arielle Davidson, New York Post, August 24, 2022
Team Biden’s student-loan “forgiveness” scheme is yet another example of a misguided and dangerous policy initiative masquerading as a public good — no surprise from an administration in which political missteps are the norm.
The left is heralding the plan, which will “forgive” $10,000 for student-loan borrowers making $125,000 or less and $20,000 for Pell Grant recipients, as genuine assistance for millions of debtors. But it’s like a Band-Aid on a gunshot wound. It not only falls short of the hype but provides a false sense of financial relief, worsening an already deeply broken system.
The reality is that it’s not the government “forgiving” debt but the US taxpayer being forced to cover it. And estimates show canceling $10,000 per borrower earning less than $125,000 will cost the country a whopping $300 billion — and each US taxpayer around $2,000. It’s easy to recall the left’s hysteria of the not-so-distant past when President Donald Trump sought $15 billion to build his border wall.
What makes President Biden’s student-debt plan particularly galling is that those set to benefit most are among the top income earners. Penn Wharton’s recent analyses found around 70% of the forgiven debt will have been held by those in the top 60% of the income distribution. Adding salt to the wound is the fact that those living in Washington, DC, likely have the most to gain: The capital is home to the highest average amount of student debt per borrower.
The entire arrangement, while a little too on the nose, is a stark reminder of the self-serving nature of America’s elite. Members of the upper crust are essentially making others pay their bills for them — others who they’ve likely condescended to for not attending the elite institutions they did. It’s a ridiculous farce for which the Biden administration should be publicly shamed.
As middle-class families face soaring inflation, driven in part by rising energy costs, Team Biden’s tone-deaf response is to throw cash at its university base. And the majority of Americans worry this debt relief will only worsen inflation by providing borrowers with more money to spend.
Look for tuition hikes
The universities themselves, meanwhile, must be thrilled by Biden’s plan. Loan forgiveness functions the same way federal aid does: It essentially greenlights colleges and universities to continue to hike prices, knowing the federal government has no qualms about covering tuition costs in the immediate future. No wonder student debt is expected to climb back to its current levels within the next four years. Indeed, as basic economics teaches us, adding a lane to the highway does not reduce traffic — it increases demand and often makes traffic worse.
Any serious discussion surrounding student debt would ask the fundamental question of how best to reduce tuition price tags, as ours dwarf those of peer nations. But this isn’t a serious discussion. It is a bribe to Biden’s base in anticipation of the midterm elections, and the US taxpayers are the ones footing the bill.
Erielle Davidson is an attorney in Washington, DC, and associate director of the Center for the Middle East and International Law at George Mason University’s Antonin Scalia Law School.