LLast week, President Joe Biden, without Congressional authorization, announced that he planned to transfer approximately $500 billion in student loan debt to borrowers who took out the loans to hard-working taxpayers across the country. . Other presidents, Republicans and Democrats, have tried to overstep their authority, and we have never hesitated to criticize them. But in our time in the Senate, we’ve never seen a president try to pass
up to a trillion dollars
with the stroke of a pen.
To be clear, Biden does not have the authority to write off billions in student loan debt without congressional authorization. House Speaker Nancy Pelosi (D-CA) agreed the authority was not there when she explained that ‘people think the President of the United States has the power to cancel the debt . He does not do. He can postpone. He can delay but he does not have this power. It should be an act of Congress. The Department of Education issued a memo in January 2021 agreeing with the speaker that the president does not have the authority to cancel student loan debt.
Yet Biden claims he has that authority under the HEROES Act, a 2003 law to help those who serve their country in Iraq and Afghanistan. This post-9/11 bill gave the education secretary the power to grant flexibility to service members with loans in times of war or national emergency. Now the White House is arguing that this targeted law, which was clearly intended to help a select group of military personnel, gives Biden the ability to transfer the debt of tens of millions of civilian borrowers to taxpayers in the wake of the COVID- 19 “national”. emergency.”
The inconsistent messages from the White House related to the pandemic vary depending on what is politically practical. They recently argued that the COVID-19 policies should be reversed. Earlier this year, for example, the administration
tried to end title 42
, a public health order that gives the government increased ability to turn back migrants at the border. As for immigration policies the administration dislikes, “current public health conditions and increased availability of tools to combat COVID-19” mean pandemic measures are “no longer necessary.” “. But now, months later, pandemic conditions are suddenly so dire that billions of dollars in debt must be forgiven.
In our system of checks and balances, this major decision about loan forgiveness must be made through the legislative process, not the stroke of a pen at the White House. It is often said that Congress does not hide elephants in mouseholes. Estimates of the cost of this program range from $500 billion to $1 trillion. For days, the White House refused to release an estimate, saying it didn’t even know how much it would cost taxpayers. Numbers that big can be hard to put into context, but it equates to six to 13 times the
all discretionary budget
Appropriate Congress for the Ministry of Education earlier this year.
Most of this budget from the Department of Education goes to those who need the most help: low-income families. This debt transfer does the opposite. A college education is an investment, and students who have taken out loans to pay for their education typically recoup their investment many times over. For an average loan of $30,000, a bachelor’s degree is
worth approximately $2.8 million
over a lifetime.
For the same amount it will cost taxpayers in borrowed money to pay off the debts of those who have already had a college education, including affluent graduate degree holders, Congress could have doubled the Pell Grant for a decade. to help those most in need access a college education. Certainly, some borrowers have difficulty making their payments. That’s why Congress has already created a number of assistance programs, such as income-tested repayment plans. These are particularly beneficial for low-income borrowers, as some borrowers receive no monthly payments.
But make no mistake: nothing is “cancelled”. Those dollars have already been spent to pay for college education; now it’s just a matter of who will repay those dollars. As a general rule, this responsibility rests with the borrower. If Biden’s action is allowed to continue, instead it will be all taxpayers, two-thirds of whom don’t have a bachelor’s degree, who will foot the debt bill for the rest.
Taxpayers will pay for this action, both by paying down debt and by increasing inflation. Biden’s debt transfer will raise expectations for debt forgiveness, encourage borrowers to take out more loans, and give colleges the green light to raise tuition even further. All of this is inflationary.
Prominent liberal economists agree that this increase in spending will contribute to higher inflation. Jason Furman, a former economic adviser to President Barack Obama, has warned that everyone will pay for this debt transfer, either in the form of higher inflation, higher taxes or lower benefits in the future. . Former Clinton Administration Treasury Secretary Larry Summers, who was one of the first to argue that Biden’s big spending bill for 2020 would lead to today’s high inflation, says again that “student loan debt relief is an expense that increases demand and increases inflation.” It seems that the White House willingly repeats the mistakes of the past.
Instead, if we are serious about reducing the cost of education rather than shifting debt after the fact, we need to make sure students know in advance how much they are likely to pay. This is why the Republicans introduced a
trio of bipartisan bills
to ensure that students can easily see estimates of the total cost of their degree, the scholarships they will receive, and what their expected earnings will look like after graduation.
Biden’s student loan debt shift is an unprecedented abuse of executive authority, an insult to hard workers who have paid off their debt or chosen not to take it on at all, and a ticking time bomb that will make economic difficulties that many are already experiencing so much worse. This is all preventable, and it’s yet another example of how the Biden administration is ignoring the needs of working-class Americans.
Chuck Grassley represents the state of Iowa in the US Senate. He is the past chair and current member of the finance committee. Rob Portman represents the State of Ohio in the United States Senate. He is a senior member of the Homeland Security and Governmental Affairs Committee and a member of the Finance Committee.