Free money! Grandpa Joe Biden knows you'd rather not repay your federal student loans, so he's doing his best to wipe out your debt, writes Rick Hess of the American Enterprise Institute. The new loan-forgiveness plan could cost taxpayers even more than the $500 billion plan struck down by the U.S. Supreme Court.
The cost to taxpayers of the pandemic “pause” on repayments is $238 billion, he writes. But, wait, there's more. It's easier to discharge student loans in bankruptcy. Changes to income-driven repayment (IDR) mean borrowers will pay less and have loan balances forgiven in as little as 10 years. By one estimate, "less than one-third of undergraduate borrowers in programs like psychology, teacher education, and the liberal arts will repay their loans."
The new plan would cancel "huge swaths of debt," writes Hess. Existing law exempts those who unable to pay. The administration seems to want to forgive the loans of those who could pay but don't want to.
The Education Department also has signaled it may seek to cancel repayment for "hardship" cases, writes Hess. This could include "having received a Pell Grant (as if a taxpayer grant represents an excuse not to repay a taxpayer loan) or dropping out of college."
Seventy-one percent of former students would qualify for loan forgiveness under these two conditions, writes economist Preston Cooper.
A Newsweek poll found that 58 percent of voters who hold student debt said they would potentially or absolutely “consider refusing to repay it.” The Biden administration has fostered a mindset in which borrowers increasingly get the sense that they should not expect to have to repay their loans.
As students see loans as gifts, colleges will be able to keep raising prices. Taxpayers' costs will soar.
"If there’s a silver lining" writes Hess, "it’s that Biden’s lawless profligacy has made brilliantly clear the need to rethink the whole wretched enterprise of student lending."
"Progressive" Democrats want an even more debt canceled for more borrowers, reports Politico.