The Eighth Circuit of Appeals extended its pause of part of the Biden-Harris plans to transfer student debt from the student who knowingly took out the loan and passed it on to other taxpayers.
The court’s extension of the block prevents the Biden-Harris Administration from moving ahead with the Saving on a Valuable Education (SAVE) plan until the lawsuits are resolved in the courts.
All three judges voted in favor of the extension of the block arguing that the states have at least a "fair chance" of winning the case in the U.S. Supreme Court.
The justices also claimed that the plan was a “vast assertion of newfound power” and the Biden administration failed to show clear authorization from Congress.
The argument against these debt cancellation plans stems in part from the assertion that administrative departments of the US Government do not have the power to enact such broad-based and substantially costly programs on their own under the direction from the president. Programs as large as this require Congress to act. Congress has the power of the purse, not the president or administrative agencies.
The Biden-Harris student loan debt transfer program is estimated to cost taxpayers $870 billion to $1.4 trillion. According to the Committee for a Responsible Federal Budget (CRFB), that is more than all federal spending on higher education from 1962 to 2019.
It is also more than all federal projected costs for universal pre-K and universal affordable childcare estimated at $750 billion. It is more than all educational appropriations over the next ten years estimated to be $935 billion from 2025-2034.
“Most of these student debt cancellation policies have not only been costly, but also inflationary, poorly targeted, counter to the mission of lowering college costs, and not financially justified,” said the Committee for a Responsible Federal Budget. “Instead of continuing down this road, lawmakers should work together on reforms that actually fix the student loan program and address the cost and quality of higher education.”
Despite all evidence that these debt transfer plans are not good for society due to the moral hazard or good for the economy, the Biden-Harris Administration plans to double down.
“Our Administration will continue to aggressively defend the SAVE Plan — which has been helping over 8 million borrowers access lower monthly payments," the Education Department said in a statement. "We won’t stop fighting against Republican elected officials’ efforts to raise costs on millions of their own constituents’ student loan payments.”
These cases are expected to end up in front of the United States Supreme Court. In the meantime, every dollar transferred to the taxpayer adds to the federal deficit.
Biden-Harris have justified the unilateral implementation of the vast student debt cancellation plan based on their belief that the Secretary of Education has the authority to prevent borrowers from being “placed in a worse position financially” as a result of a national emergency during the COVID pandemic. But, even long after the pandemic has long been over, they continue to push this debt transfer plan.
However, CRFB points out that the majority of those who will benefit from debt cancellation are NOT currently in a worse position financially as a result of the COVID-19 pandemic.
Further, surveys of income data and level of financial security suggest that those most negatively affected by the pandemic are not holders of student debt, but instead, those who never went to college in the first place.
In other words, the student loan cancellation plans transfer the debt of financially secure debt holders with a college degree to less secure taxpayers who never went to college. The Biden-Harris plan put the clerk and the tradesman in the position of paying back the college debt of the doctor and the lawyer.
“Student debt cancellation is a poorly targeted solution that will mostly help borrowers whose finances were not adversely affected by the pandemic and as the data make clear, cancellation is not financially justified,” says CRFB.