“Bidening” Farewell to Basic Economic Fairness

Isabella, who makes about $56K annually as a construction worker, may get to help pay off the student loans of her neighbor Christina who makes $105K teaching Gender Studies at a nearby University.

What Just Happened?

While those who benefit are celebrating, much of the nation criticizes President Joe Biden's student debt forgiveness program. They are rightfully questioning who will pay for the program, which according to estimates, would cost the average taxpayer over $2,000.

Biden's plan offers $10,000 of debt forgiveness to all former U.S. students earning less than $125,000 annually, and those receiving Pell Grants will receive up to $20,000.

But the nasty little fact that nothing like this is actually “free” seems to have escaped Biden and his team. Someone has to pay the bill. This time, it's the 87% of Americans without student loans.

Righteous Anger

Most outraged are those who’ve worked hard, saved, gone without, and paid for their own or their child’s education. They’re told now that they and their children should help pay off student loans for an Ivy League graduate making twice their income because Joe Biden owed his left-wing base a political favor. Equally bitter are those who couldn’t attend college due to the skyrocketing cost. Nothing about the situation is sitting well with the majority of American citizens.

I myself graduated college many years ago with about $6,000 in student loan debt. Married at age 24, my wife and I paid it all back by going without a lot of “frills” for a few years. Our son turned down partial scholarship offers at Vanderbilt, Pepperdine and Tulane to attend the University of Alabama on a full academic scholarship. He wanted to graduate with no debt – what was he thinking!!?

The Unexplainable

The White House seems to be at a loss to explain the reasoning for Biden’s decision to take probably the most costly unilateral executive action in history. Even press secretary Karine Jean-Pierre was not able to clarify things much when confronted with the question recently at her regularly scheduled press conference.

In the administration's view, Biden claims to have reduced the U.S. deficit by $1.7 trillion, providing fiscal headroom for student debt forgiveness. Part of their logic is that ending the pandemic-triggered pause on student loan repayments by the end of 2022 will 'offset a lot of it'. With a straight face they’re telling the 87% who don’t benefit from the loan forgiveness that the inevitable restart of student loan repayments will magically create “new money” to pay for Biden’s potentially unconstitutional move.

Kicking the can down the road regarding student loan repayments is nothing new to the Biden administration. Wednesday, Biden announced that the pause would be extended 'one final time' until December 31st in response to the COVID-19 pandemic. (It remains to be seen if this truly is the ‘one final time’).

Dollars and (This Makes No) Sense

Let’s consider the numbers. Several reports estimate that wiping out $10,000 in student loans for those making less than $125,000 per year would cost a minimum of $300 billion, with others forecasting the real amount to be closer to $1.0 trillion. As if the sheer size of the action isn’t shocking enough, according to most studies, between 69 and 73 percent of debt forgiven would benefit households in the top 60 percent of the U.S. income distribution. Biden’s decision amounts to one of the most significant wealth transfers from lower earners to higher earners in U.S. history.

According to Andrew Lautz, director of federal policy at the National Taxpayers Union, the move is a blatant transfer of wealth from society at large to borrowers who went to college. Consumers and taxpayers are economically affected by that, and there’s no getting around it. It’s no stretch to say that if enacted and not struck down by the courts, Biden’s plan would literally take money from blue-collar workers such as Isabella and give it to wealthier graduates such as Christina (fictional names). It’s a perverse form of the tale of Robin Hood in reverse – taking from the poor to give to the rich.

How Did We Get Here, and How Do We Get Out?

And why is there so much student debt held by these relatively wealthier graduates in the first place? Many point to universities raising tuition while producing graduates with expensive but narrowly marketable liberal art degrees such as Gender Studies or Asian History for example. Often these degrees are valuable only to those seeking a career inside the machine of liberal academia. Forgiving student loan debt in this massive way will only incentivize higher education to continue raising tuition even further.

What’s the answer? Universities have billions of dollars in endowments that sit untouched and untaxed. And incredibly, these same universities currently have no measurable financial incentive to turn out graduates with marketable skills enabling them to earn enough money to repay their student loan debt themselves. In the view of most people, any solution to the issue of massive student debt that doesn’t directly address the subject at the college and university level is nothing more than a political pay-off. Why not have the university “co-sign” the loan with the student for at least a portion of the debt instead of Isabella and the rest of us?

A little fairness and “educated common sense” would come in handy right about now. Then, hopefully, members of both parties in Washington will hear the outrage and respond appropriately.