Despite last year’s Supreme Court ruling, the Biden administration continues to look for ways to transfer student loan debt from borrowers to taxpayers. Republican Attorney General Kris Kobach is making Kansas the first state to challenge the administration’s SAVE loan forgiveness program in court.
The American Enterprise Institute commended Kobach and cited several reason why it is important to stop the program.
- It’s costly. An estimated cost of $559 billion over 10 yearsalready makes it more significant than Biden’s original forgiveness, but the true cost is likely higher.
- It’s permanent. Unlike the original one-time forgiveness, this new plan, which is already being implementedunder “emergency” authority, allows all existing and new borrowers to enroll for the foreseeable future.
- It’s unfair. Progressives scoff at this argument and allege that older borrowers who worked hard to pay off their loans are simply jealous that they weren’t afforded the same forgiveness. What they miss is that these responsible borrowers — and anyone who chose a path other than borrowing to attend college — must now pay off the loans of current and future borrowers through their capacity as taxpayers.
- It props up the worst college programs. Because repayment is tied to future earnings and lower earnings lead to loan forgiveness, this plan is actually a massive subsidy to programs that prepare students for low-earning occupations or have no economic value whatsoever.
- It encourages more schools to offer loans and raise prices. Many colleges, especially community colleges, permit students to use Pell Grants but not loans. Why? Because the only meaningful federal accountability mechanism, the Cohort Default Rate, bars colleges from accessing bothPell and loans if too many of their students default. But under SAVE, because it’s near-impossible to default coming out of a community college program, such programs will be strongly encouraged to offer loans and raise prices to capture more of the subsidy.
- It undermines democratic institutions. While Joe Biden frames his candidacyas a movement to save democracy, his policies are undermining it. With his initial loan forgiveness effort, he found a loophole where he could claim a power he didn’t have and then vetoed a bill from bipartisan majorities of the House and Senate that attempted to stop him.
“Indeed, SAVE may be the most destructive policy ever to come out of the U.S. Department of Education, and there’s serious competition for that title,” AEI said. “Hopefully, more states will join Kansas in attempting to stop it.”
–Alan Goforth | Metro Voice