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Fixing America's student-debt crisis would be extremely difficult. It's much simpler to take the Joe Biden approach: provide people with bailouts they didn't earn, continue running up the national debt, worsen the country's growing inflation crisis, and keep money pouring into left-wing universities nationwide in the process.
Late last month, the Department of Education doubled down on Biden's failed strategy, announcing the White House would extend its current pause on federal student loan payments, potentially as late as the end of August 2023. The pause was originally set to expire this month.
According to the Biden administration, the move is a kind-hearted response to a recent federal court decision that halted the president's debt cancellation scheme. In reality, it's nothing more than a crony deal that benefits some of Biden's biggest supporters.
In August, the White House announced a program to forgive $20,000 in student loans for students who receive Pell Grants and up to $10,000 for non-Pell Grant recipients.
Republican-led states sued in opposition to the program, and the U.S. Court of Appeals for the Eighth Circuit subsequently issued an injunction stopping it from continuing while an appeal to another court ruling about the program is being resolved.
In the wake of this decision, the Biden administration decided to delay federal loan payments until 60 days after the debt-cancellation program is approved or rejected by courts. If the issue has not been resolved by June 30, 2023, borrowers will have at least 60 more days until the payment freeze ends, which could mean many with student loan debt will not be required to make another payment until September 2023.
It's the eighth time the student loan payment freeze has been extended since the pause began in early 2020, at the height of the COVID-19 pandemic.
In a statement released on November 22, Miguel Cardona, the Department of Education secretary, asserted that the pause is just. "It would be deeply unfair," he said, "to ask borrowers to pay a debt that they wouldn't have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests." But the truth is, Biden's choice to maintain the student loan freeze has nothing to do with justice or fairness.
In fact, the student loan cancellation scheme is fundamentally inequitable, because it requires other taxpayers to unjustly shoulder the cost of student loan debt for millions of others. In many cases, taxpayers who paid off their own student loan bills will be required to pay for the debts of others too. In what sense is that "fair?"
A much more likely explanation for the pause is that Biden is eager to score political points with young voters, many of whom have not had to make a student loan payment in nearly three years. The program also provides significant benefits for government and nonprofit workers.
Under the federal Public Service Loan Forgiveness program, a borrower who works for a government or nonprofit organization full-time and makes 120 monthly student loan payments (10 years' worth) is eligible to receive total debt forgiveness, regardless of how much is owed.
Common sense would dictate that, during the loan payment freeze, borrowers should not be eligible to receive credit toward the 120-month requirement, unless they continue making payments. But the Biden administration has continued to count non-payments during the pause towards the total number of payments required for Public Service Loan Forgiveness. This means government and nonprofit workers have eliminated three years of payments from their 10-year requirement since the pause began in 2020.
The longer the student loan freeze continues, the more government and nonprofit workers will be eligible for total loan forgiveness, shifting the burden to taxpayers. The broader population has been forced to bear the cost of ever-higher inflation in recent years—a direct result of the federal government's out-of-control spending.
Student debt forgiveness and the payment pause disproportionately benefit wealthier, higher-earning individuals, many of whom have government jobs. The majority of these folks are supporters of Joe Biden, and the president wants to keep it that way. That's the real reason for yet another extension of the country's unnecessary student loan freeze.
Justin Haskins (Jhaskins@heartland.org) is the director of the Socialism Research Center at The Heartland Institute and a New York Times bestselling author.
The views expressed in this article are the writer's own.
