President Biden`s Student Debt “Forgiveness” Boondoggle

[Photo by JECO Creative Commons]
President Biden recently announced that he intends to “forgive,” cancel, really, up to $10,000 in debt for student borrowers in the higher education guaranteed loan program. He refers to this as a debt forgiveness program but it is an unusual type of debt forgiveness” within the context of the guaranteed loan program. All other loan forgiveness under this program consists of individual borrowers being forgiven part or all of their debt in return for their providing services to communities to meet the special needs of that community, such as for example for teachers committing to and completing teaching assignments in significantly underserved school districts. The President’s debt cancellation or gift will be for all student borrowers earning up to $150,000 a year.

President Biden and others indicate this debt “forgiveness” initiative is justified in large part because it is an undue economic hardship for student borrowers to repay the full amount of their debt and/or because Biden was elected after promising cancellation of student debt and he is honor bound to deliver on that promise. To some, like Senator Cotton of Arkansas this is tantamount to a “bribe.”

“Forgiving” $10,000 of student loan debt will encourage students/future students to take out more debt. And it will encourage colleges and universities to raise tuition. This plan is nothing more than a bribe from Biden to his base.”

This proposal of the President raises two important questions. First, by what authority can any President cancel all or part of the debt of individual Federal guaranteed student loan borrowers just because he decides he wants to do it or alternatively because he wishes to redeem a campaign promise to do so when there is no other good reason for doing it? Under this loan program if the borrower cannot repay all or part of the loan, provision has already been made to deal with this eventuality. Second, if the President has the authority to give a $10,000 benefit to one group of people earning up to $150,000 a year, can he legally let alone equitably justify not giving the same $10,000 gift also to all other Americans earning $150,000 or less? Because President Biden believes he has the authority to give student borrowers a gift of $10,000 we must unite in demanding that he do the same for all of us that meet his artificial income guideline to qualify for this giveaway! Being a student borrower must not qualify them to be given a $10,000 gift denied to the rest of us.

Perhaps the idea that the President has the authority to vary the terms and conditions of guaranteed loan agreements grew out of the unprecedented actions of the Federal Government to suspend the obligation of these student debtors to comply with loan repayment terms during the government pandemic lockdowns. It was a time of forced sweeping federal and local government restrictions, resulting in major decreases in economic activity, precipitating the loss of many jobs, including those held by former students with loan debt. However, the economic conditions are drastically changed in the last 12 months- economic growth is healthy and real unemployment is now almost zero. Today, if student borrowers want to work there are jobs to be had AND if there are extreme individual hardships there are provisions for the cancellation of student debt in appropriate circumstances.

The current extreme inflation is clearly an economic hardship for all but guaranteed loan repayment amounts are not subject to increases due to inflation like food and most other things and the repayment amounts will remain the same as provided for in the individual loan agreements. So, given that student loan repayments have been suspended until now, economic conditions have improved and if anything, employee compensation has been on the rise recently so where is the economic necessity for cancelling student debt or relieving borrowers of their obligation to resume repayment of their loans? The guaranteed student loan program was authorized by Congress and they alone should have authority to modify the program. The President cheered on by Democrat Party officials simply does not have the legal authority to cancel student debt in whole or in part.

Today most Americans but especially the poor are suffering significant economic hardships due to inflation. If the economic problems caused by inflation were a good reason for the Federal Government to make a gift of $10,000 to student borrowers earning up to $150,000, isn’t it unfair not to give the same amount to the actual poor? According to the U S Census Bureau 15% of Pima County residents are living in poverty. (However, Pima County has recently reported that, according to ITS information there are 370,000 people in our County that live in poverty!) If there is any economic justification for the Federal government to give $10,000 to student borrowers earning as much as $150,000 a year, fairness demands, and we voters must demand that those actually living in poverty also be given the same amount of relief.

It`s called inflation but all that means is that everything costs substantially more due to too much money having been pumped into the economy as is justified by increases in economic productivity. The result of too much money in the economy is that consumers and businesses as well as governments are able to bid prices higher as they compete for the same limited amount of goods and services. Inflation also means that because prices are higher, wages of workers can buy fewer goods and services with the same amount of income,

In the current inflationary period, it is estimated that wages can generally buy approximately 3% less due to inflated prices and annually the total added cost of essentials such as food, rent, fuel and etc. is approximately $5,000 more for the average family. On the other hand, if you happen to live in rental housing, recent reports show that it is not uncommon for rent increases of hundreds of dollars a month. Also, mortgages on homes in Tucson`s artificially ballooning price environment have increased substantially. Interest rates have increased in just a few months from approximately 3% to 6%, and higher. Mortgage interest costs have doubled but only if you have an excellent credit score. Lower credit scores mean your interest cost will increase even more. It is estimated that higher fuel costs are responsible for 40-50% of price increases because transportation fuel costs, including worker commuting costs, are a major component of so much of the stuff we buy. As we know, gas has more than doubled from roughly $2 to $5 a gallon since Biden took office and diesel has increased even more. Finally, most prices do not go back down when inflation is finally brought under control.

The obvious answer to the question of why President Biden has decided to “forgive” $10,000 in student debt is that expressed by Senators Cotton of Arkansas and Warren of Masachusettes. Cotton calls it a “bribe” by Biden for votes he garnered after he promised the debt cancellation during his presidential campaign and as Warren recently stated, the President promised to forgive student debt if he was elected and because he was elected he is obligated to forgive the debt. Obviously, the President also wants student borrowers to vote for Democrat candidates in elections this November. and that may be why he is delaying the debt cancellation until a date closer to the November elections. It should be clear to all that that is what is going on here.

Now that President Biden is determined to “forgive” $10,000 in debt to student borrowers making less than $150,000 annually, we are left with the question of the President’s authority to unilaterally change terms and conditions of the guaranteed loan program without Congressional authorization AND the fairness and legality of gifting $10,000 to some but not all people earning up to the same $150,000 a year. There is nothing democratic about what the President is proposing and it is clear that it is the height of hypocrisy for him to give student borrowers a $10,000 gift to offset the horrendous costs of inflation but not do the same for all Americans in the same earnings bracket.

It is instructive to note that last week, Senators Warren of Massachusettes and Sanders of Vermont proposed that the Federal Government make a one time payment of $2,400 to Social Security retirees due to rising prices caused by inflation BUT ONLY if the Republicans agree to new taxes to cover the cost, Why would they require a tax increase to account for this increase in expenditures but not for cancelling student debt and why is there a difference in providing $10,000 to student borrowers and not doing the same for the desperately poor? I believe the answer is obvious. This proposal by these two Senators to help the poor is not serious, it is nothing more than political theater. Politicians are always ready to patronize the poor, often, even as they exploit them.

1 Comment

  1. Brandon has no clue and as to student debt well there really needs to be STRINGS tied to it. Degrees MUST BE worthwhile, not basket weaving or the study of music aka lib arts degrees. They must be in fields that will provide something to the individual and the community. As to those making $150000 well thats a stretch as many will NEVER make that much. Starting salaries are on average $50000 per year. If you make $150K then you can more than afford to pay your debt. We have a mortage etc and come no where near $150 yet we live comfortably. Most of the debt would be studies that benefit no one in most cases and for post grad stuff. My grandson JOINED the USAF to pay for his college, so we know there are ways to do good and get rewarded, but most of these ‘students’ most likely wouldnt be able to qualify if they tried.
    Brandon and hs cohorts need to FUND this out of their pockets. He has $5 million UNDECLARED and claims he has no knowledge of how hunter put it there. Peelousey is a mltimillionaire as are many so if they are so concerned let them pony up since they DONT PAY TAXES like they are always screaming about!

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