River News: Our View

Maybe the second time is the charm.

Actually, we’ve forgotten just how many times President Joe Biden has attempted to end-run Congress with unconstitutional student loan forgiveness plans — he undertakes so many unconstitutional dictatorial exercises it’s hard to keep track — but let’s just say the latest scheme announced last week isn’t the first.

This little exercise in trying to bribe young voters isn’t any more legal than before, and it’s equally stupid as a political gambit. But, hey, if it’s all you got ….

At the heart of the plan is a bid to cancel up to $20,000 in interest for income-eligible Americans who now owe more than they originally borrowed because of unpaid interest. That would help about 25 million people. The debt of those who qualify for other federal forgiveness programs but haven’t applied for whatever reason would also be canceled, helping 2 million more.

There are other categories, such as financial hardship, but, in total, debt will be wiped out or significantly reduced for 30 million debtors. This on top of the help Biden has already given student loan borrowers, such as capping payments as a lower percentage of discretionary income, waiving future interest accruals, and discharging balances after a score of years.

Naturally, Republicans are howling — 11 Republican attorneys general have filed a legal challenge already — and they are right to do so. The arguments are familiar but they are solid. Working class taxpayers who never went to college but work hard for a living shouldn’t have to subsidize the loans of those who went to college with big loans to get useless intersectional social-justice degrees. Neither should those who went to college without loans or who paid them off.

How fair is that?

It’s not, and polls show that those who are being punished by the Democratic regime are increasingly ready to avenge themselves at the ballot box. That’s the stupidity of what Biden is doing — he’s creating a backlash that is potentially larger than the votes these measures will win him.

There’s another way to look at that, we admit: Biden may be writing off working class Americans altogether — indeed, that seems to be the thrust of most of his policies — and trying to tempt the young culture class with the money. Democrats know they won’t vote for Trump, but they are terrified that too many of the young culture class might vote for Robert F. Kennedy Jr. or Jill Stein or Cornell West or not at all.

Anyway, whether politically astute or not, it’s bad policy (debt relief will only drive inflationary forces ever higher, on top of $2 trillion deficits), it’s discriminatory, and it’s unconstitutional because it’s not coming from Congress.

But none of that is likely to stop the Biden Democrats. Fortunately, the courts likely will stop it because the legal footings will not hold. The administration believes this forgiveness scheme is different because they hang their hat on the Higher Education Act, which gives the education secretary the ability to forgive debt for certain narrow categories of borrowers, which Biden has outlined above, rather than broad across-the-board relief the president proposed before.

However, add all the categories up and it still amounts to a massive relief scheme that is so broad and sweeping compared to the overall program that it likely won’t pass the major acts test the Supreme Court has embraced. In other words, it’s so significant it needs congressional approval.

There’s a side note to this. As the Wall Street Journal has reported, Biden is attempting to get the relief in place prior to the election and before the courts can act, and to do so the administration has already been holding mandatory stakeholder meetings, including borrowers, student loan industry officials and representatives of colleges and universities, to fast track the rule-making process, and that has been going on for months … quietly. How’s that for transparency.

All that said, there’s yet another side to the story. Yes, millions of student loan borrowers and their families borrowed irresponsibly to finance low-value degrees. Many others are affluent elites who simply hope to get the deplorable class to underwrite them.

But there are also millions of borrowers and their families who only did what society has been telling them to do for decades. From birth, our universities and teachers unions have drilled it into everybody’s heads that to “be a somebody” in this world, you have to have a college degree. And then a graduate and postgraduate degree. 

Understandably, desperate parents want the best for their kids and their dreams.

All the while, universities kept boosting tuition fees to pay their bloated staff of woke ideologues and maintain their lofty facilities. They built huge rainy day slush funds and funded nonessential larks for the favored class.

Then they dangled ever fatter loans in front of kids wanting to go to college and then secure their coveted graduate degree: “Sure the tuition is high, but look at the deal we have for you!”

Once the loan companies got their hooks into them, they engaged in all sorts of deceptive practices that have spawned any number of class action lawsuits. A borrower might be paying principal and interest — mostly interest at first — but take one continuing education course at a community college to keep your license and many times those borrowers found their interest suddenly capitalized into the principal. 

That’s why so many borrowers who have never missed a payment owe more than they did when they started out. 

That’s not right, either.

So some forgiveness — and righting of wrongs — is necessary, but we agree that it’s not the responsibility of taxpayers. So is there no way out?

We believe there is, and it comes from a proposal from Florida Gov. Ron DeSantis, made during his doomed campaign. And that is, rewrite the entire student loan debt system so that the debt would be backed by universities.

The universities would be held accountable for their actions. They would pay if debt got out of control. Universities would then have an incentive to focus loan programs on vocational and degree programs that lead to gainful employment, and not on woke degrees.

“Universities need to have an incentive to produce gainful employment for people,” DeSantis said. “Don’t let anybody tell you that the only way you can be successful is through a four-year Brick and Ivy degree.”

DeSantis would also enable students to go to bankruptcy court to discharge their debts.

The idea is to make student loans reasonable again. One way to do that — the only fair way — is to make universities have skin in the game.

That can be debated, but, in the meantime, Biden’s new scheme to fuel inflationary pressures, to pummel taxpayers, to open the inflationary spigot even more, to reward a system of spoils and to incentivize it further is exactly the wrong way to go.