The Biden administration offered a $10,000 student loan rescue for persons with $125,000 (or $250,000) annual salaries. This legally problematic measure redistributes revenue from hard-working taxpayers to higher-income college graduates, without addressing rising college expenses.
The Penn Wharton Budget Model estimates this approach might shift $300 billion from borrowers who benefit from college to taxpayers who gain nothing. Middle-class families may owe more than $1,500. Why? More inflation, greater tuition, bad precedent.
The bailout is predicated on a false premise that college graduates are drowning in student debt and unable to pay or that most student debt is held by low-income households. Nope. The average borrower exits college with less than $25,000, not to mention those who work through college without debt or have paid it off.
Most debtors' lifetime degree worth exceeds this amount, thus they should pay back their loans. Blanket loan "forgiveness" inevitably implies a handout to people who can pay back their debt, which insults the many students and families who sacrificed to pay for college without debt or redeem their loans the old-fashioned manner.
It insults workers who didn't pursue higher education and student debt.
Bailouts for those who don't need support are bad enough in normal circumstances, but doing so when inflation is high is economic malpractice. Such bailouts add to the Biden administration's inflationary spending and tax hikes.
Such rescues lay the seeds for greater college tuition and a super-sized re-run by encouraging future students to anticipate their debt to be transferred to taxpayers with a pen. When students have an artificially inflated desire to borrow, institutions may charge greater costs, whether that extra money goes to quality or administrative bloat and campus amenities.
To fix the college affordability crisis, we should boost competitiveness by revamping our accrediting system, connecting financial aid to student results, and strengthening accountability at U.S. higher education institutions. This responsibility means they have more skin in the game if their pupils do poorly and default on their loan repayment obligations.
Student loan bailout is unconstitutional administrative overreach and a disrespect to blue-collar people. Congress created student loan programs with the idea that borrowers will repay the loans.
The cancellation of student loan debt announced Wednesday is an unlawful overreach of the Secretary of Education's powers, a position President Joe Biden seemed to endorse before he took office. Congress agrees. Pelosi: "The President can't do it… that's not even a consideration."
The Wednesday announcement won't fix the college affordability dilemma. When autumn tuition bills are due, millions of existing students' loan balances will continue to rise.
The last thing America needs is another expensive entitlement, especially one that helps higher-income people and has little to do with relieving actual hardship. While millions of borrowers will see a $10,000 reduction in student debt, the Biden administration should tell taxpayers they're paying for it.
The preceding is a summary of an article that originally appeared on DAILY CALLER.