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Biden’s Student Debt Bailout Plan a Model of Government Perfidy

Brett Davis

Posted on September 4, 2022 17:45

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The president's plan to transfer student debt to taxpayers is a terrible response to skyrocketing college costs that are the result of the federal government meddling in the student loan business.

As an example of a terrible government policy presented as a great gift to the people – or at least some of the people – one would be hard pressed to do better (worse?) than President Joe Biden’s student debt bailout plan.

That plan – announced by the president in the latter part of August – would see those who qualify not have to pay back up to $20,000 of their student loan debt.

Almost immediately, supporters’ linguistic chicanery betrayed the true nature of the plan.

Biden and other proponents repeatedly characterized the plan as loan forgiveness – defined as a creditor declining collection of a debt – when in fact it is a transfer of student debt to taxpayers to the tune of an estimated $300 billion to $1 trillion.

That transfer, in all likelihood, will exacerbate the record-breaking inflation Americans are already experiencing in the post-COVID-19 economy. College tuition is also bound to increase.

The irony being that the federal government is the very reason for the rapid increase in the cost of college. Federal subsidies have increased 295 percent since the 1991-92 academic year. Not coincidentally, colleges doubled tuition in real terms – far outpacing inflation – in response over the same time period.

That means Biden’s massive bailout, with no accompanying plan to get the federal government out of the student loan business, will – if past is prologue – drive tuition even higher. And formal research does indeed find that colleges respond to the expansion of financial aid by increasing tuition.

And then there is the alleged authority by which Biden, with a stroke of a pen, put student debt onto the backs of taxpayers.

The president, without shame, cited the Higher Education Relief Opportunities for Students Act of 2003 as the source of his ability, via executive order, to shovel money from lower-income, non-college-educated workers to higher-earning college graduates.

It turns out, however, that the courts may end up having the final say on Biden’s legal rationale for his student debt transferal plan. That is because the HEROES Act was passed in the aftermath of the Sept. 11, 2001 terrorists attacks to allow relief from student loan payments during times of war or national emergency.

In other words, the Biden administration is on shaky legal ground in relying on a novel interpretation of vague language in a 19-year-old statute to accomplish a goal, massive in scope, that it could not get through Congress.

So, what does it all mean?

It means the Biden administration is pretending to address a problem created by the federal government in the first place with a vote-buying scheme – the midterm elections are some two months away – that is grossly unfair, regressive in nature, inflationary and possibly illegal.

Michael Ramirez, MichaelRamirez.com

 

Brett Davis

Posted on September 4, 2022 17:45

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