Administration unveiled a student loan forgiveness program. The administration ensured $10,000 forgiveness for federal student loan borrowers as well as $20,000 forgiveness for Pell Grant recipients. President Biden stated, “These targeted actions are for families who need it the most: working and middle-class people hit especially hard during the pandemic making under $125,000 a year.” Despite the rhetoric, this plan will do more harm than good.
I’m sure many people have heard of TANSTAAFL: There Ain’t No Such Thing as a Free Lunch. There will always be a price to pay for economic stimuli.
A recent study at Wharton stated that debt cancellation will cost up to $519 billion and the student loan payment pause until December 31 will result in a loss of $16 billion. Implementing this plan during an inflationary period will drive up prices throughout the country, and this price hike will most impact the citizens who have to repay this debt. Colleges have adjusted prices in response to the relief plan, essentially rendering the plan useless. According to Forbes,“Between the academic years ending in 1989 and 2016, the cost for a four-year degree doubled, even after inflation.” College prices will only increase as wages barely change.
Throughout the history of the U.S, we have seen college prices rapidly grow because of inflation and loan forgiveness plans. For example in 1965, President Lyndon B. Johnson passed the Higher Education Act. This act was in play from 1966-2013, however the National Center for Education Statistics proved that from 1966-1976 there was an increase of 5 % for private institutions but a 8% percent decrease for public institutions. Until President Johnson made his forgiveness plan, all types of college institutions were on par with each other as well as inflation. People can assume that this exact divide will happen again with President Biden’s plan.
Biden’s plan itself is unconstitutional. Nothing in the constitution grants the president the power to relieve over 40 million students of private debt. Separation of powers has been in play since the constitution was created. The president bypassed Congress to pass a relief plan for students. This type of power should not be used by the president as it ignores each part of our government.
It is also unfair for the people who worked hard to pay for their college debt. Forgiving loans will make people lazy and lose a sense of responsibility in paying for their own education. Unlike some of our freedoms, which in America are naturally given rights, education is a service people seek and receive voluntarily. Forgiving loans is just teaching someone to not pay money they have freely entered into a contract to pay and not face the challenges of the world.
The Biden Administration’s new student debt relief plan has many potentially damaging implications. Not only does it lack the ability to resolve the debt crisis, it is also unjust and unconstitutional. Did Biden create this plan just to help students? Or did he just do it to receive votes for his mid-term election? Whatever the motivation, Biden’s plan will harm the very citizens it seeks to assist.
