Arnold Ahlert / Nov. 23, 2020

Student ‘Debt Forgiveness’ Is an Immoral Sham

Democrats want to transfer wealth, but it won’t benefit who you think it will.

The American Left, including 239 nonprofit and community organizations, has called on presumptive president Joe Biden to embrace student-loan forgiveness and unilaterally cancel nearly $1.7 trillion in student debt. The rationale? The move would ostensibly stimulate the economy — and reduce the racial wealth gap.

“Before the COVID-19 public health crisis began, student debt was already a drag on the national economy, weighing heaviest on Black and Latinx communities, as well as women,” the group asserted in a letter sent to Joe Biden and Kamala Harris. “That weight is likely to be exponentially magnified given the disproportionate toll that COVID-19 is taking on both the health and economic security of people of color and women. To minimize the harm to the next generation and help narrow the racial and gender wealth gaps, bold and immediate action is needed to protect student loan borrowers, including Parent PLUS borrowers, by cancelling existing debt.”

As ever, leftists attempt to add gravitas to their argument by inserting race and gender into it, but even some of their own are skeptical. “If you cared about creating progressive policies to help low- and middle-income families based on need and hardship, then student loans are not that,” said Adam Looney, an economist from the left-leaning Brookings Institution who also served on President Barack Obama’s Council of Economic Advisers and in his Treasury Department.

According to an analysis he co-wrote, households in the top 40% of income earners owe nearly 60% of the outstanding debt and make nearly 75% of all student-loan payments, while those in households at the bottom 40% of income earners hold under 20% of student-loan debts and make only 10% of the payments.

Research by the Urban Institute makes that dynamic even clearer: It explains that “debt forgiveness plans would be regressive — providing the largest monetary benefits to those with the highest incomes.”

Such realities are irrelevant to a Democrat Party looking to “help” (read: bribe) one of their more reliable constituencies. Moreover, prominent party members are trying to outdo each other in that pandering effort. While Biden’s plan aims to forgive any borrower’s first $10,000 of student debt, regardless of household income, Senators Elizabeth Warren and Chuck Schumer coauthored a bill in September calling for the cancellation of up to $50,000 in student debt and the elimination of any tax liability for federal student-loan borrowers arising from that debt cancellation.

Yet even as they were writing that legislation, both senators insisted a President Biden could dismiss the debt unilaterally. “The President of the United States has the power to broadly cancel student loan debt, help close the racial wealth gap, and give a big boost to families and our economy,” Warren argued. “It’s time to use this existing authority and permanently improve the lives of tens of millions of Americans.” They further asserted that the secretary of education has the legal authority to cancel existing debt based on section 432(a) of the Higher Education Act of 1965.

Apparently, Biden sees it differently. Last Monday, a Biden official stated that Biden wants “immediate action” on the effort to forgive $10,000, but that it was Congress’s job to implement it.

Moreover, despite what Schumer, Warren, and the aforementioned 239 nonprofit and community organizations want, an executive order would likely face a legal challenge based on the constitutional reality that Congress controls spending.

Make that bipartisan, grossly irresponsible spending of catastrophic proportions. In 2020 alone, $3.1 trillion was added to the national debt. And while much of it can be rationalized by providing millions of Americans with a buffer in the midst of an unprecedented hit to our economy, there is no denying that the nation’s debt has reached a staggering $27.2 trillion — before adding any portion of $1.7 in loan forgiveness to the pile.

And therein lies the infuriating rub, as once again Democrats and their media allies embrace another euphemism to obscure what’s really going on.

There is no such thing as “student-loan forgiveness.” There is only a student-loan transfer to the American taxpayer, including taxpayers who have never even sniffed the inside of a college classroom — and taxpayers who paid, or are paying off, their own loans, despite the scrimping and saving, taking the extra job, or any number of additional hardships required to do so.

Debt forgiveness makes an utter mockery of their efforts.

Moreover, the federal government, which owns about 90% of student debt, already has a number of programs that allow borrowers to avoid paying off loans in their entirety, such as “income-driven repayment” options, which forgive the remaining debt after 20-25 years, or as little as 10 years for those who work in public service.

So what’s this really all about? The denigration of honor and personal responsibility, as well as the wholesale abrogation of freely made contractual obligations, sold as “compassion.” The catering to any number of students and their equally corrupted supporters — a Deadbeat Constituency as it were — who see no problem with getting an education and subsequently deciding someone else should pay for it.

But wait, there’s more. “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,” explains columnist Erik Sherman, who adds that’s “more than twice the rate of inflation.”

That’s because when taxpayers are the ultimate backstop for all student-loan defaults, colleges are wholly immunized from sustaining any losses. Thus, they can raise their prices with impunity.

Moreover, colleges remain immune not only from fiscal responsibility but from educational accountability as well. A system that would point students toward statistically well-paying majors has been fiercely resisted by colleges replete not only with worthless majors but with ever-expanding bureaucracies invariably tied to some aspect of “social justice” or “diversity” — all of which drive up tuition costs.

Loan forgiveness would exacerbate, not mitigate, this loathsome reality.

And because of that irrefutable dynamic, the inevitable question arises: What makes anyone think student-loan forgiveness will be a one-off? College costs continue to rise, and most parents and students remain erroneously convinced a college degree is an absolute prerequisite for success. When the next wave of students can’t pay off their loans, what then?

A well-known definition of “insanity,” as in doing the same thing over and over and expecting different results, is the most benevolent interpretation of what Democrats are attempting to do. A less benevolent but far more accurate interpretation is the ongoing effort to get younger generations of Americans wholly comfortable with relying on government to solve their problems — even to the point of moral bankruptcy, which is exactly what welching on one’s freely made contractual obligations is all about.

“Hardly anything could be more divisive than shunting taxpayer dollars at folks who’ve been to college while low-skilled workers bear the brunt of our current economic pain,” the National Review editorial board concludes.

For college-educated, bicoastal American elites who view half of America as “deplorable,” that’s a feature, not a bug.

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