By Rich Lowry
Friday, August 26, 2022
The president's supporters harbor a
profoundly insulting assumption that those who have earned degrees are more
valuable than all those Americans who haven’t.
It’s hard to top President Joe
Biden’s Afghan withdrawal for reckless policy-making, but his student-loan-forgiveness scheme
is a contender for his second-worst decision.
Based merely on his say-so, with no
credible congressional authorization, Biden is going to forgive $10,000 in
student debt for individuals with incomes below $125,000 or household incomes
below $250,000. Those who received a Pell Grant are eligible for $20,000 in
relief.
Forgiveness is a sop to a narrow class of
people. It is unfair to people who haven’t gone to college, predominantly lower
income. It is unfair to people who did go to college and didn’t take on loans.
It is unfair to people — not realizing that their loans might go away if they
held out long enough — who foolishly repaid their loans. It is unfair to people
who will take a loan the day after the forgiveness goes into effect.
In short, the loan forgiveness is an
arbitrary giveaway in a country where fewer than 40 percent of people have a
four-year college degree.
If Biden were to explain the policy
accurately in his characteristic fashion of resorting to folksy wisdom from his
parents, he’d say something like: “My father told me when we were driving by
commencement at the University of Pennsylvania one day — ‘Joey, be sure you’re
always thinking of the college-educated, including those with advanced degrees,
first. They are the best among us.’”
The New York Times news
story on the forgiveness features a young woman whose parents are immigrants
from Mexico and went to community college for two years before transferring to
UCLA. She’s delighted that almost all her loans will be wiped out, but before
your heartstrings can get pulled too much, the Times notes
that she’s currently getting a master’s degree . . . at the London School of
Economics.
Presumably, she was going to be okay
without getting showered with federal largesse denied to the children of
immigrants who haven’t gone to college, let alone pursued an advanced degree at
one of the most prestigious institutions in the Western world.
Even if this young woman is poor now, it
is doubtful that she’ll be poor forever. As Brian Riedl of the Manhattan
Institute notes, the typical Millennial student with debt incurred $30,000 for
a bachelor’s degree. That’s a lot, but the degree will boost incomes over a
lifetime by $1 million to $2.8 million.
Of course, there are low-income people who
are struggling with their student debt. Even if you think they should get
relief, the Biden policy doesn’t narrowly target them. Former Obama economist
Jason Furman points out that Biden’s forgiveness could provide $40,000 in
relief to a married couple making just under $250,000, and it includes debt
incurred at graduate schools.
The fact is that the top 40 percent of the
income distribution carries a bigger share of student debt than the bottom 40
percent.
There is all sorts of other debt that
Biden could theoretically forgive that is widely distributed up and down the
income scale and is a burden to people, too, whether from auto loans or credit
cards. Instead, student debt has been the obsession of Biden and his
supporters. They deny it, of course, but their focus reflects a deeply held,
profoundly insulting assumption that those who have earned university degrees
are more valuable and worthy than all those Americans who haven’t.
Then, there are the broader economic
effects. Advocates of loan forgiveness used to argue that it would be
stimulative, but in an inflationary environment, they aren’t putting that
argument front and center anymore. Biden’s move will cost roughly $500 billion,
and none of it is paid for, easily swamping the cuts to the deficit that
Democrats touted in their so-called Inflation Reduction Act.
The program is a debacle at every level
and isn’t the product of a messy congressional compromise or unavoidable
circumstances — it’s Biden’s doing, and his alone.
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