by Mitch Kokai
Senior Political Analyst, John Locke Foundation
It might be the biggest giveaway in American history. President Joe Biden wants to cancel more than $1 trillion of outstanding student loan debt. Biden has already delayed for more than a year student loan repayment, and under his new rules, most delinquent and deadbeat borrowers would NEVER have to repay.
What a deal for the people who never paid a dime back of the tuition money they owe to Uncle Sam.
This plan makes suckers out of the millions who have felt honor-bound to pay off their debts. My wife spent years after graduating from college diligently writing checks to pay off the tens of thousands of dollars of loans. That’s the way it works when you borrow money and you’ve signed a commitment to pay the money back.
Think about what would happen if this loan repayment policy were to be implemented. Who would ever pay off a student loan ever again after this blanket forgiveness program?
Who would benefit? The most recent Federal Reserve Survey of Consumer Finances found that only 22% of families had student loan debt and that “student debt has consistently been disproportionately held by higher-income families.” So this is a giveaway to the financially successful students and families paid for by middle-class workers, millions of whom didn’t go to elite universities in the first place.
Once student loans move to “free college” for everyone, university tuitions, which are already soaring at two to three times the inflation rate, would race further ahead of all other consumer prices. When I attended the University of Illinois in the early 1980s, the tuition was $1,000 a semester. Now, it’s closer to $12,000 a semester. Where’d all the money go?
The Biden administration has misdiagnosed the fundamental problem here.