Executive Action Will Be Questioned; Issue May Go To the Supreme Court
Well, President Biden made the announcement this week. It's official, his plan to forgive massive amounts of student loan debt. This has been a long time coming. It was a campaign promise of the president and now he's gone and done it. The average student debt in this country is about $30,000 per student, and he's now going to forgive $10,000 of student loan debt for everyone who makes less than $125,000, $250,000. If you're married, that's pretty much everyone who has a student loan in this country for sure. 43 million people are going to be eligible for this student loan forgiveness. And if you owe money to Pell Grants, you're getting $20,000 in debt forgiveness. And for the rest of your student loans, you're not going to have to make any payments until next year.
This makes it seven times that the president has put a moratorium on repaying student loan debt. Gee, golly, all these announcements, by sheer coincidence, are just in time for the elections. That's the cynic in me. Hey, forgiving all these loans, it's going to cost the government almost $400 billion. And guess who's getting most of the benefits? Not low-income workers who can't afford to repay the loans. Three fourths of the benefit is going to people who are in the top 60% of wage earners in this country. That's according to a study by the Wharton Business School.
President Biden has already cancelled $32 billion in student debt for 2 million people. Now, here comes more debt cancellation for 33 million more people. And no one is going to be happy about this. Those on the political left, they wanted him to forgive $50,000 in student loan debt. So this $10,000 isn't enough for them and those on the political right. They hate the idea of yet another government giveaway, which will only increase the federal debt, raise inflation even further. And every fair-minded person? (That's me.) We hate this idea simply because it is so unfair.
How Do You – As a Hard-Working American - Feel About This?
If you paid for college out of your savings, you get nothing from Joe Biden's plan or what. If you work your butt off to earn enough money to pay for school, you get nothing from Joe Biden's plan. Or what if you borrowed the money somewhere else or you didn't get a student loan? If you refinanced your mortgage or used credit cards, you get nothing from Joe Biden's plan. Or what if you decided you couldn't afford college because of the huge cost – or you didn't have the money and so you didn't go? You get nothing from Joe Biden's plan. Or what if you didn't go to the college, you really wanted to attend because you couldn't afford it - and you went to a less expensive school, a second-choice school, because you didn't know the government was going to step in and cancel your student loan debt? You get nothing from Joe Biden's plan.
So the only way that anyone can possibly be in favor of this plan is if you're among the 43 million people who are going to be benefiting from it. You're not focused on fairness. You're being selfish and greedy. This loan forgiveness doesn't make the debt vanish into thin air, by the way. It's still a bill that has to be repaid. And as long as you're not going to repay it, then all the other American taxpayers are going to have to repay it.
Thanks, but I'm one of those taxpayers as my wife and I paid for our own college. Thank you very much. And we're helping to pay for college for our nieces and nephews right now. I really don't feel like paying for yours too. Hey, sorry if that offends you, but I'm tired of paying for my car. So how about if Joe Biden forgives my car loan? I'm tired of paying off my mortgage. How about if Joe Biden repays my mortgage for me? Tired of my credit cards? How about if the government picks up that tab, too?
Look, even some economists who are Democrats hate this idea, like Larry Summers. He was Bill Clinton's treasury secretary. And Jason Furman, an economist in the Obama administration. They both hate this idea. They say it's going to result in future tax increases for everybody. Oh, and get this, most of the loans that are going to be forgiven under the president's plan? They're loans who are taken out by people who frankly don't need help repaying it.
Half of all US households in this country are married couples, and all of them who earn up to $250,000 qualify for this $10,000 loan forgiveness. $250,000. Guess who earns $250,000 or less? Airline pilots, chief executives, dentists, pediatricians, architects, judges, astronomers, physicists, podiatrists, marketing managers, makeup artists, financial managers, petroleum engineers, air traffic controllers, pharmacists, computer engineers, lawyers, compensation managers, sales managers, purchasing managers, HR managers, optometrists.
All of these people are earning between $125,000 and $250,000. And if they're married, they're going to get $10,000 in student loan forgiveness. Do these people really need to get that $10,000? And the worst part is this it's not going to do any good for any of them. Look, if you've got student loans, you haven't been making payments anyway for more than two years because the repayments have been suspended due to the pandemic. Everyone's back at work now, but for some stupid reason the student loan payments haven't resumed.
And now President Biden says you still won't have to make payments for the rest of the year. So forgiving the loans isn't really doing you any good because you haven't been paying the loans back for years. Meaning this isn't putting any money in your pocket. You've already diverted the money that you used to pay for student loans to other expenses.
Who Does Biden’s Student Debt Forgiveness Really Help?
So all this means is that you're not going to have a new bill to start repaying. If President Biden really wanted to help people and the economy, he would give those 43 million people a check for $10,000 each – and let them spend the cash now just like all the other stimulus money that the government gave out during the pandemic. That was $6 trillion of stimulus. This is just $400 billion.
So why doesn't he just do that instead? Forgiving the debt isn't really helping anyone. We're going to have to see if Congress goes for this. The president says he's doing it by executive action. Congress may come up with legislation to prevent him from doing it. It only takes one Democrat to say no to this. We're going to see if anybody's got the guts to vote now during the election season. I'm not sure even any Republicans will vote against it because pretty much every voter everywhere wants this deal. That's because just about every voter everywhere owes money to student loans or has someone in the family who does. And hey, we all love free money, don't we? Even if it's not fair, even if it's not helping. And now that the government is willing to forgive student loans, the government is going to be encouraging all sorts of bad behavior. Colleges are going to raise tuition. They figure, why not? We'll just increase eligibility for student loans because the government will just cancel those loans in the future.
President Biden's proposal also says that if you earn less than $30,000, you don't have to make payments on your loans. He's actually encouraging people not to work because if they do work, they've got to pay the loans back. But if you don't work, you don't have to repay the loan. 200 years ago, you got thrown in prison if you didn't repay your debts. Now you get rewarded. This entire proposal is teaching precisely the wrong lesson and rewarding people for all the wrong behaviors. If we persist in bad public policy like this, the economic future of our nation is at risk. And that's the truth about your future. Oh, and you know what else is coming in your future? Lots of legal challenges to the president's new plan. This ain't over - and it's going to culminate with the November elections. Stay tuned.