Yesterday, August 24, 2022, President Biden issued a plan to "forgive" (cancel) up to $20,000 in student loan debt for Pell Grant recipients, and $10,000 for others with federal student loan debt. To qualify, debtors must earn under $125,000 annually (or $250,000 for couples). President Biden justified his "Student Loan Relief Plan" by stating that the cost to attend college had nearly tripled since 1980 and that student loan debt can be burdensome and hinder the debtor's ability to qualify for business loans, mortgages, and save for retirement. For more details on the plan, please click on the link below:
In reviewing President Biden's plan, we completely agree that the cost of attending college has soared and, to many lower and middle-class families, it is now unaffordable. Unfortunately, President Biden's plan does nothing to lower those costs or make college more affordable in the future. In addition, we agree that student loans can be burdensome. Still, this fact does not explain why the millions of U.S. taxpayers who have never taken out a student loan (or have already paid off their own loans) should now pay for other people's student loans. By most estimates, President Biden's student loan forgiveness plan will cost taxpayers between $300 billion - $500 billion dollars. That is a HUGE government handout, especially since it has no "means test" (no financial assessment of a debtor's ability to pay). In short, this handout is being given to many people who aren't struggling financially at all - they have college degrees, good jobs, and earn decent salaries (again, up to $125,000). The people who no longer have to make their student loan payments may instead decide to use that money to buy a new car, new furniture, take a vacation, etc., thus adding even more fuel to our soaring inflation rate.
It's important to remember that the arguments for "forgiving" student loans can be just as valid for other types of individual debts, to include car loans, credit card debts, medical debts, mortgages, etc. Since those types of loans/debts can also be very burdensome, should President Biden create another government plan to also "forgive" those debts for everyone earning less than $125,000 annually? At some point, the government handouts have to stop.
As a final thought, what message does this huge government handout send to the millions of Americans who worked hard, sacrificed, skimped and saved over the years to finally pay off their own student loans? To those responsible individuals, the message is clear: SUCKERS!
For some media reports on President Biden's Student Loan Relief Plan, please click on the links below:
UPDATE: On 6/30/23, the United States Supreme Court struck down President Biden's plan to arbitrarily forgive over $400 billion dollars of student loan debt, ruling that President Biden did not have the legal authority, under the "HEROES" Act (2003), to forgive such a large amount of debt without authorization from Congress. After the ruling, President Biden indicated he would try again to forgive the student loan debt, this time using the Higher Education Act (1965). Instead, we believe President Biden should focus on creating a plan to help make college education affordable again to the lower and middle class. Just forgiving current debt does nothing to prevent the next generation of students from amassing even more student loan debt. This cycle must end.
For more information, please click on the media links below:
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