The day after President Biden announced his student loan "forgiveness" scheme, the Associated Press ran a piece highlighting criticism of the program. In Student loan crisis awaits new generation despite Biden plan, Collin Binckley reported:
For millions of Americans, President Joe Biden’s student loan cancellation offers a life-changing chance to escape the burden of debt. But for future generations of students, it doesn't fix the underlying reason for the crisis: the rising cost of college.
The specter of heavy debt will still loom over current high school seniors — and everyone after them — since the debt cancellation only applies to those who took out federal student loans before July 1.
Among the main causes is rising college tuition: Today's four-year universities charge an average of nearly $17,000 a year in tuition and mandatory fees, more than double the inflation-adjusted average from 30 years ago, according to federal data.
The rising cost of college is not the “underlying” reason. It is actually the effect. This doesn’t bode well for anyone looking for a solution.
Anticipating criticism, Biden’s plan came with a separate proposal that aims to lower federal student debt payments in the future. The proposed regulation would create a new repayment plan with monthly payments capped at no more than 5% of a borrower’s discretionary income, down from 10% in similar existing plans.
It would also forgive any remaining balance after 10 years — down from 20 years in existing options — and it would raise the floor for repayments, meaning no one earning less than 225% of the federal poverty level would need to make monthly payments.
The underlying cause of the student loan crisis is the Federal student loan program itself. Since the federal student loan program ramped up, the cost of college over the past 45 years far outstripped inflation. Through various mechanisms, colleges were able to pump up tuition almost with abandon. This is exactly what you’d expect from an ever-growing flood of taxpayer money into an industry, which destroyed market restraints.
Not surprisingly, coming from a Democratic Party Administration, the "solution" turns out to be to expand borrowing by making it easier to make payments and ultimately easier to avoid paying it off. It’s a perpetual “forgiveness” scheme.
Of course, actually fixing the problem is not the goal. Expanding government control of higher education and buying a whole new reliable block of Democrat voters is what it's really about. If they really were interested in a solution, they would end the student loan program, and all federal involvement in paying for college. But no “critic” quoted in the article even hinted at that as the only genuine practical and moral solution. It was more about how to rearrange the deck chairs on the Titanic.
Related Reading:
Forgiving Student Debt Without Abolishing the Federal Loan Program Is Morally Wrong by Robby Soave for Reason
Student Loans Should Be Repaid
End, Don't Reduce, Federal Student Higher Education Funding
Federal Student Loans and the GI Bill
Will Biden's Student Loan Debt Cancellation Plan Hold Up in Court? By Damon Root for Reason
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