Courts have ruled against most (but not all) of Biden’s plans to cancel student loan debt, finding that they were illegal. But that isn’t stopping him from handing out even more student-loan forgiveness at taxpayer expense, even though that may be unlawful. The New York Post reports:
Lame-duck President Biden is pushing forward with his election-year bid to cancel outstanding federal student debt, with his Education Department announcing Wednesday at least $147 billion in potential loan forgiveness for 23 million student borrowers over the next decade.
As part of a proposed rule, Education Secretary Miguel Cardona could issue waivers for the federal loans, mostly to Pell Grant recipients, as soon as September — less than two months before Election Day 2024. If finalized, the rule would immediately cancel up to $132 billion in student debt.
The department said it “will begin emailing all borrowers with at least one outstanding federally held student loan to provide updates on potential student debt relief, and to inform them they have until August 30 to call their servicer and opt out if they do not want this relief,” according to a press release.
“The rules that would provide this relief are not yet finalized, and the email does not guarantee specific borrowers will be eligible,” it added, noting that so far, 4.8 million students borrowers have had a collective $168 billion in debt canceled.
That includes $69.2 billion for 946,000 borrowers through fixes to Public Service Loan Forgiveness (PSLF); $51 billion for more than 1 million borrowers with income-driven repayment plans; $28.7 billion for more than 1.6 million borrowers whose institutions shuttered or were sued and part of settlements; $14.1 billion for more than 548,000 borrowers with either a partial or total disability; and $5.5 billion for 414,000 borrowers through the Saving on A Valuable Education (SAVE) Plan.
“I didn’t think this administration could get any more devious or stoop any lower,” said House Education and Workforce Committee chairwoman Virginia Foxx (R-NC). “Overpromising and underdelivering is an undeniable hallmark of this administration. Bottom line, the Biden-Harris administration is using students and borrowers as political pawns knowing its actions are illegal because it cares more about winning elections than helping borrowers.”
Earlier, a watchdog group accused Education Secretary Miguel Cardona of violating federal law by sending a mass email attacking Republicans for questioning the legality of the Biden administration’s cancellation of student debt. Protect the Public’s Trust (PPT) called the email “glaringly political” and filed a complaint with the Office of Special Counsel (OSC) and the Education Department inspector general accusing the education secretary of violating the Hatch Act, which prohibits federal employees from using their office to engage in partisan political activities intended to influence the outcome of an election.
Several high-ranking members of the Biden-Harris administration have violated the Hatch Act. The OSC determined that Energy Secretary Jennifer Granholm and Secretary of Housing and Urban Development Secretary Marcia Fudge broke the law by wading into partisan politics while using public property.
On July 18, a federal appeals court in St. Louis blocked the Biden administration’s attempt to illegally write off billions of dollars in student loan debt — such as allowing certain borrowers to have their debt forgiven after ten years.
After the Supreme Court ruled last year that Biden’s attempt to cancel $500 billion in student loan debt was illegal, Biden canceled some of the same debt using new excuses, writing off billions more in student loans. In April, 17 states sued the Biden administration over its new plans to cancel student loans, arguing that Biden’s new plan was illegal, too.
An April 2024 report by the Committee for a Responsible Federal Budget estimates Biden’s student loan bailouts, put together, “will cost a combined $870 billion to $1.4 trillion.”
Canceling student loans is a bad idea. It encourages colleges to jack up tuition, by making it more attractive to take out big loans to cover college tuition. When students are willing to borrow more to go to college, colleges respond by raising tuition. The Daily Caller notes that “each additional dollar in government financial aid translated to a tuition hike of about 65 cents,” according to the Federal Reserve Bank of New York.
Canceling student loan debt is “regressive and unfair,” says Katherine Abraham, a former adviser to Obama who served as Commissioner of the Bureau of Labor Statistics during the Clinton administration. As Greg Price points out, “Only 37% of Americans have a 4-yr college degree, only 13% have graduate degrees, and a full 56% of student loan debt is held by people who went to grad school. Biden’s plan to cancel it would be like taking money from a plumber to pay the debt of a lawyer.” Even the liberal Washington Post called Biden’s student-loan bailout “a regressive, expensive mistake.”
Student loan forgiveness also is inflationary. Jason Furman, chairman of President Obama’s Council of Economic Advisers, called Biden’s plan to cancel student loans “reckless.” Furman said, “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.” Biden’s student loan forgiveness will increase inflation, inequality, tuition, and the national debt.
The Wall Street Journal criticized Biden’s new plan to write off student loans after the Supreme Court ruled against his old plan, arguing that the new plan “will encourage colleges to raise costs, especially in graduate programs for which there are no federal loan limits. Who cares if students can’t repay? They will be forgiven one way or another.”
The Supreme Court’s 2023 ruling against Biden’s earlier loan-forgiveness plan was expected by most observers. Some of them accused Biden of currying favor with young voters by promising student loan forgiveness that he knew was illegal and would be struck down, thus giving them false hope. Biden sought to deny this, saying “I didn’t give any false hope. The Republicans snatched away the hope that they were given.”
But that was dishonest on Biden’s part. Earlier, he himself had admitted he lacked the power to forgive student loans en masse. The president said of student loan cancellation during a 2021 CNN town hall, “I don’t think I have the authority to do it by signing with a pen.”
Other Democratic Party leaders used to admit that Biden lacks the power to forgive student loans, the very ones denouncing today’s Supreme Court decision. On July 28, 2021, “then-Speaker of the House Nancy Pelosi explained: ‘People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
As journalist Charles Cooke noted in 2023, “Biden knew this was illegal. Everyone knew this was illegal. That he tried to do it anyway, in violation of his oath of office, remains a monumental disgrace.”
