Biden's student loan bailout creates inequities, has no upside: Doug Holtz-Eakin
Stony Brook University professor of economics Stephanie Kelton and former CBO Director Doug Holtz-Eakin discuss Biden's plan to cancel $39 billion in student loan debt on 'America Reports.'
In response to the Supreme Court overturning President Biden’s $300 billion student debt scheme, the Biden administration is now taking a shot at an even larger plan to transfer student debt onto taxpayers.
President Biden’s "SAVE Plan" radically overhauls the Income-Driven Repayment (IDR) program meant to aid lower-income borrowers in paying back their loans and turns it into yet another massive loan forgiveness scheme.
This latest attempt to cancel student debt would allow a majority of bachelor’s degree student loan borrowers to not even pay back the principal on their loans.
President Biden responds to the Supreme Court's decision on the administration's student debt program at the White House on June 30, 2023. (Demetrius Freeman/The Washington Post via Getty Images)
To put that into context, a household making up to $225,000 a year would now be eligible to have their student loan payments drastically reduced and eventually "forgiven" at the expense of taxpayers.
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Just like Biden’s past schemes, this policy does not "forgive" debt. It transfers the burden of $559 billion in federal student loans from those who willingly took out the loans onto Americans who chose to not go to college or already sacrificed to pay off their loans.
This week, my Republican colleagues and I introduced a Congressional Review Act (CRA) resolution of disapproval to block this unfair and irresponsible IDR policy. The resolution prevents average Americans, 87% of whom don’t have student loans, from carrying the financial burden of someone else’s student debt.
I hope all of our colleagues will join us in supporting this CRA resolution and stand up for the families who will be stuck with a policy that the administration is pursuing not to be fair to all, but rather to favor the few.
In the meantime, the Biden administration still refuses to propose any solutions that address the underlying problems that created the debt crisis in the first place.
In the last 30 years, tuition and fees rose at private nonprofit colleges by 80%. At public four-year institutions, they have jumped up by 124%.
While tuitions at universities have increased, the federal government has made more money available for students to borrow. This has left too many students drowning in debt without a path for success. We need real solutions.
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As ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, I recently led my Republican colleagues in introducing the Lowering Education Costs and Debt Act, a package of five bills aimed at directly addressing the issues driving the skyrocketing cost of higher education and the increasing amounts of debt students take on to attend school.
Our legislation puts downward pressure on the cost of colleges and universities that have used the increased availability of federal loans to inflate their prices, leading students to take out rising amounts of debt.
Additionally, it equips students and families choosing between schools with information on the cost, enrollment, retention, completion and post-college earnings of the school or program of study to determine if the degree is worth the price of admission.
Importantly, our bill also offers students clear information about the duration of their loan, expected monthly payment, likely future earnings opportunities after attending their school and program of choice, and a breakdown of all aid, including scholarships.
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Presenting students with clear and understandable information ensures they are equipped with the needed tools to recognize the financial commitment they are about to make.
Lastly, the bill streamlines the confusing array of repayment options for borrowers from nine to two. This will give students and families clarity as to which repayment plan best fits their needs.
These are commonsense solutions that actually address the root causes of the student debt crisis. In fact, some of the bills included in the package already have strong support from both Republicans and Democrats.
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President Biden’s plan is not a fix. It is a politically motivated giveaway that forces taxpayers to shoulder the responsibility of paying off someone else’s debt. We need real leadership to address this issue.
Republicans have put forward legislation that can address the rising costs and debt of students not just now, but for generations to come. I urge President Biden to put politics aside and work with Congress to find a real solution for students and families.