Scott wrote about the Biden administration’s massive cancellation of student debt here and here. On its face, the administrative action appears to be illegal. In January 2021, a memorandum by the Principal Deputy General Counsel of the Department of Education concluded that the “HEROES Act” did not confer authority for such a mass loan forgiveness. That memorandum was repudiated and revoked yesterday by the Department of Education’s General Counsel. Nancy Pelosi is on record, saying that the Biden administration cannot lawfully forgive student debt. Today she changed her mind.
The theory underlying the administration’s mass cancellation is that it is “directed at addressing the financial harms of the COVID-19 pandemic.” How the obligation to repay debt on the part of millions of borrowers, or any incremental difficulty in repaying debt on the part of some of those millions, can be chalked up en masse as a “financial harm of the COVID-19 pandemic,” is beyond me.
At Liberty Unyielding, Hans Bader argues that the various price tags the press has attached to Biden’s mass forgiveness are much too low. The original includes copious links:
News articles have estimated the cost of Biden’s plan at around $300 billion. But that’s an underestimate. Earlier estimates of the cost of student loan forgiveness pegged its cost at $330 billion ($2,100 per taxpayer). But that was based on the assumption that a maximum of $10,000 would be written off, not the higher amount of $20,000, as Biden has now made clear will be written off for millions of student loan borrowers with Pell Grants. Increasing the write-off to $20,000 will cost billions and billions of dollars. Moreover, Biden also announced an extension of the student loan repayment moratorium for even those loans he didn’t write off. That will cost billions of dollars more, because the suspension of student loan repayments costs taxpayers over $52 billion per year.
Moreover, Biden did something far more momentous today than just a one-time write-off of $300 billion in student loans. He announced the Education Department’s intent to revise income-driven repayment plans in a way that would allow students who foolishly attend expensive colleges to largely avoid repaying their loans, by cutting their payments by well over half. As a result, many borrowers will pay only a trivial amount each month, and can stop paying anything at all after 10 or 20 years, no matter how much of their student loan balance remains. The remaining student loan balance will be written off, at taxpayer expense. That could eventually cost over a trillion dollars.
Hans also notes that the Committee For a Responsible Federal Budget has estimated the cost of the debt forgiveness plan at $600 billion, which is still too low because the use of income-based repayment plans will rise in response to the prospective changes in the student loan program that the Biden administration announced today.
The changes to income-driven repayment plans will prop up America’s most worthless and overpriced private liberal arts colleges. Which is probably the point — to enable them to keep raising tuition (by shifting the cost to taxpayers), rather than closing due to students fleeing them.
Sounds right. Many have questioned the political wisdom of a debt forgiveness program that benefits the most prosperous at the expense of those who didn’t go to college, and those who repaid their college loans. But I guess it shows who the Democrats consider to be their core constituency.
Today a reporter asked Joe Biden about the fairness of the debt forgiveness plan. Biden turned and tried to respond. To me, Biden has appeared pathetically frail and long gone in dementia for a while now. But this is perhaps the saddest performance I have seen from him. His response has something to do with multi-billionaires, but I can’t make it out. In any event it was not responsive to the reporter’s question, which Biden was entirely incapable of engaging. The man is on his last legs.
The video comes from Breitbart.