To no one's surprise, the Supreme Court struck down President Biden’s student loan forgiveness plan. The president should have seen it coming. He said himself that he doubted whether he had the authority to forgive student loans. Nevertheless, like a child in a temper tantrum, Biden blames the debacle on Republicans.
In a recent public statement, President Biden said he would “stop at nothing to find other ways to deliver relief to hard-working middle-class families.” The White House
announced that the Department of Education is rolling out a new income-based repayment
plan so generous that most college borrowers enrolled in
the new program will pay little or nothing on their undergraduate federal loans.
Due to the
COVID crisis, the Department of Education allowed 40 million student loan
debtors to skip their loan payments for the past three years without
accruing penalties. The Supreme Court’s decision means these borrowers
must resume making monthly loan payments later this summer.
In typical govspeak,
The White House said yesterday it will construct a bureaucratic “on ramp” to make it easier for student borrowers to repay their loans. As a practical
matter, this on-ramp will encourage most debtors to delay making loan payments for
Biden really means it when he says he will stop at nothing to deliver relief to middle-class
families, he can do one simple thing. He can encourage Congress to amend
the Bankruptcy Code to allow distressed student debtors to
discharge their student loans in the bankruptcy courts. All Congress needs to
do is delete two words from the Code: “undue hardship.”
to the student loan crisis is so simple that even a child can understand it. Why
then has President Biden yet to endorse bankruptcy reform? Why didn't Democrats
enact this reform when they had control of Congress? Why don't Republicans
support it now?
I'll tell you
why. Important political constituencies are happy with the status quo. Colleges and universities benefit from a
system that pumps billions of dollars of federal money into their coffers without
holding them accountable in any way. Colleges are free to raise tuition year
after year--forcing their students to borrow more and more money--without regard to whether the students can repay their loans.
The student loan crisis will not be solved until higher education is reformed. Unfortunately, colleges and universities. have no incentive to reform themselves. Thus, the student loan crisis will not be addressed until American higher education collapses.