The Dems’ Student Loan Scam
Their plan to cancel billions in student loan debt would disproportionately help higher-income students with expensive grad degrees.
For years, Democrats have played around with the idea of canceling student-loan debt. Often, this ploy seeks nothing more than stirring up enthusiasm among college-age voters or appealing to the party’s socialist wing.
But now that Democrats have taken back the White House and Congress, they want action. Rather than working with Republicans and putting the idea up for a vote, however, some Democrat lawmakers want to bypass the legislative process.
“A group of progressive lawmakers … introduced a resolution calling on [President Joe] Biden to erase $50,000 in student loan debt via executive order,” reports Fox Business. “The lawmakers maintained that Biden could use existing executive authority under the Higher Education Act to order the Department of Education to ‘modify, compromise, waive or release’ student loans.”
So the same Democrats who accused Donald Trump of abusing executive authority want their president to cancel $1.5 trillion in debt without a debate?
What’s most troubling, though, is that this write-off wouldn’t primarily benefit the struggling college undergraduate waiting tables in a coffee shop. According to The Wall Street Journal, “The main beneficiaries of the Warren-Schumer write-down would be higher-income students who borrow more for expensive graduate degrees. Colleges have expanded graduate programs because they can employ the students at low cost as teaching assistants.”
And a working paper published by the Becker Friedman Institute of Economics at the University of Chicago indicates that the highest income earners would receive more loan relief than those at the bottom of the socio-economic ladder. Two of the bill’s proponents, Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez, forgot to mention this little fact.
But this isn’t the first time Democrats have tried to appeal to young voters with their debt-forgiveness scheme.
In 2010, they enacted the Health Care and Reconciliation Act, which empowered the federal government to take over student-loan programs and directly dole out money to students. Unfortunately for taxpayers, many of those loans will never be repaid as a result of income-based repayment plans capping borrower monthly payments at 10% and canceling the debt entirely after 20 years of repayments.
Yet even with the reins of power in the hands of congressional Democrats, Biden isn’t ready to make a commitment.
As Zack Friedman notes at Forbes, “Discord among Democrats is potentially bad news for student loan cancelation. Despite the proposed resolution, Biden has been consistent that he’s unlikely to cancel student loans through an executive order.”
Biden himself has proposed canceling $10,000 in exchange for community service. Sure, that’s exactly what the American economy needs: millions of unemployed college dropouts volunteering in order to pay off loans.
While Democrats like Warren claim that canceling student debt will spark economic growth, according to the Committee for a Responsible Federal Budget, ending monthly loan payments would only put $90 billion back into the economy, since borrowers can pay back their loans over several decades.
And here’s a question: What about all those borrowers who’ve worked hard and already paid back their loans, or those who borrowed from private lenders and won’t be covered by the Democrats’ plan? Why should they be punished?
Clearly, canceling student debt is a bad idea for a country that continues to struggle after a year of COVID shutdowns and is already burdened by an insurmountable debt. The plan to erase student debt is yet another example of the government riding in on a white horse and promising to save us from a crisis government caused in the first place.
Debt can’t be canceled without people paying for it, and those people are American taxpayers and their children. Those who didn’t sign for the loans in the first place shouldn’t have to foot the bill for them.
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