President Biden’s college debt forgiveness programs are not only illegal, but morally and ethically wrong, and economically stupid. It certainly has appeal to those whose debt is forgiven – after all, that is the payment for their votes. But to no one else.
College loan forgiveness is, at its core, a wealth transfer. Despite what the left would have you believe, it simply takes from those who have little and gives to those who have much. The Biden administration estimates that 27.6 million borrowers (around 64% of all borrowers) will have some or all of their debt forgiven. According to the U.S. Bureau of Labor Statistics (UBS), college graduates make on average $67,860 per year compared to $38,800 per year for non-graduates, which is a 65% gap. Biden’s plan necessitates taking from those in society who are already in the lowest income bracket to give to the college graduates of the country.
So, not only is it morally and ethically wrong, it’s also just bad policy from an economic perspective. It sends the wrong message to borrowers who willingly took out loans to finance their education. When individuals take on debt, they have a responsibility to repay it. Forgiving student loans undermines personal accountability and discipline, creating a moral hazard by encouraging future students to borrow more, assuming their debts will also be forgiven someday. This would fuel inflation in higher education costs and perpetuate a cycle of debt and forgiveness. And it is also a slap in the face to those who have already paid their debts,
It is also illegal. President Biden does not have statutory authority to forgive debt, except by direction of laws passed by Congress (as the Constitution makes perfectly clear). “Justification” for his forgiveness is to claim as his authority laws that were clearly never intended for that purpose.
Forgiveness also does not deal with the root cause of spiraling costs, which are directly linked to the Federal government guaranteeing student loans, without a single thought given to the loan recipients ability to repay like any private entity would do. A study published by the New York Federal Reserve Bank found a direct connection between federal student aid and tuition increases, every dollar of subsidized student loans, increased tuition by about 65 cents.
Student loan forgiveness is not a solution but a short-sighted and lazy attempt to buy votes. It is an illegal action which fails to address the root causes of rising education costs and unfairly shifts the burden on taxpayers who did not benefit from higher education loans.