As national debt continues to soar, President Joe Biden announced $1.2 billion in a new round of student loan debt transfer to taxpayers. This latest round of debt transfer would ‘benefit’ roughly 35,000 public service workers enrolled in the Public Service Loan Forgiveness program.
The Congressional Budget Office estimates the latest round of student loan bailouts pushes the federal deficit to $1.915 trillion for Fiscal Year (FY) 2024.
President Biden said on X, “My Administration is canceling student debt for 35,000 public service workers through Public Service Loan Forgiveness. Now 4.76 million folks have benefitted from our various debt relief actions, each receiving an average of over $35,000 in cancellation. That matters.”
It is widely believed this effort is meant to bolster Biden’s struggli campaign. The trouble is the debt isn’t “canceled” as Biden says, it is transferred to other people.
Why is this so important? It sounds like it might be a good idea to help out people with student loan debt.
First and foremost, it is a program skewed toward benefiting the rich. The top 5th richest households hold $3 in student loan debt for every $1 held by the bottom 5th. The People’s Policy Project points out that it is likely even more regressive than those numbers show since many student borrowers in lower income brackets now are young and will probably earn more later in their careers. They can pay back their own loans. They don’t need the retail worker or the plumber to do it for them.
Also, those with the most debt are getting graduate degrees that have even more earning potential. Passing their debt on to others, who are regular working-class Americans makes little sense and reeks of unfairness.
Preston Cooper with Forbes says it simply, “It is regressive and unfair, won’t stimulate the economy, and creates perverse incentives to borrow more in the future.”
Biden’s latest round brings the total student loan debt transferred to other taxpayers to $168.5 billion for roughly 4.76 million debtors.
Despite the fact that the United States Supreme Court struck down Biden’s ‘Student Loan Forgiveness Program’, Biden continues to implement it. Biden initially tried to use the HEROS Act to give the Secretary of Education a wide berth to forgive student loans. But, the HEROES Act only allows the Secretary the power to “waive or modify” laws and regulations governing the student-loan programs not forgive the loans in part or their entirety – hence the majority decision against the Biden Administration.
Justice Robert’s sharply written opinion stating, “The plan “modifies” student-loan laws and regulations only in the same sense that the French Revolution ‘modified’ the status of the French nobility — it has abolished them and supplanted them with a new regime entirely” seems to be almost entirely ignored by the White House.
The Court also ruled against Biden’s argument that the ‘debt-relief program’ is consistent with the purpose of the HEROES Act – to give the Secretary the power to provide relief to borrowers during a national emergency. In this case, Biden claimed the national emergency was COVID even though the pandemic was and is over.
Roberts wrote in the majority decision that, “The question here is not whether something should be done; it is who has the authority to do it.” Roberts pointed to the “major questions” doctrine, which is the idea that if Congress wants to give an administrative agency the power to make decisions of vast economic or political significance, it must say so clearly. In this instance, there is no 'clarity' that gives the Department of Education such vast economic powers.
Supreme Court decision not-withstanding, Biden has walked right past the Court’s decision as though it never happened and continued his efforts to transfer billions of dollars in student loan debt to other taxpayers - $168.5 billion to date.
Meanwhile, hours after the Biden-Harris announcement, the 8th U.S. Circuit Court of Appeals granted a request by seven Republican-led states that blocked Biden-Harris from continuing to implement another student loan debt program designed to lower monthly payments for millions of Americans, The SAVE program. An emergency administrative stay was issued blocking implementation until a ruling is made on an injunction.
Missouri Attorney General, Andrew Bailey, said on X “The Court granted our emergency motion to BLOCK Joe Biden’s entire illegal student loan plan, which would have saddled working Americans with half-a-trillion dollars in Ivy League debt. HUGE win for every American who still believes in paying their own way.”
The court ruling put on hold parts of the U.S. Department of Education's debt relief plan that had not already been blocked by a lower-court judge.