The liberty principle for this Freedom Friday is President Joe Biden’s executive order about student loan debt. Under Biden’s plan, the federal government will “forgive” $10,000 of student debt for any American earning less than $125,000 ($250,000 per couple). If the former student received Pell grants, they would have $20,000 of student debt “forgiven.”
Responsible Americans worked their way through college and/or paid off their student loans as soon as possible after graduating. My children worked in high school and college. They even donated plasma to pay college expenses. They sacrificed after graduation to pay off their student loans. Their children are working and saving for college to decrease the amount that they will borrow. Biden’s plan is unfair to former students like my children and future students like my grandchildren. College should prepare the students to become self-reliant adults who pay off their own loans and their own bills.
Rachel Greszler at The Daily Signal believes that Biden’s “morally and economically derelict” plan will make our out-of-control inflation worse, and it will also make the labor shortage worse. Greszler explained her thinking as follows.
The Committee for a Responsible Federal Budget estimates that a $50 billion, one-year extension of the pause in student loan repayment would increase inflation (as measured by the personal consumption expenditures index) by 20 basis points.
The budget group’s estimates for the roughly $500 billion worth of taxpayer spending on loan “forgiveness,” payment pause extensions, and other payment reductions will be significantly more inflationary.
Moreover, in one year these provisions would wipe away almost two times the 10 years’ worth of deficit reduction estimated to come from congressional Democrats’ recently passed Inflation Reduction Act.
Student loan repayments generally require people to work to repay their debts. The extended pause on loan repayments, up to $10,000 or $20,000 in outright loan forgiveness, and a new income-based repayment provision that eliminates payments for those who don’t work would make it even easier to work less or not at all.
And this comes on top of a slew of bad government policies that have caused unprecedented labor shortages.
Nearly two job openings are available today for every unemployed worker, and half of employers report that they have job openings they can’t fill….
If all those missing workers were contributing to the economy instead of sitting on the sidelines, it’s possible that gross domestic output would not have declined in the first half of this year and the U.S. might not be entering a recession.
In addition to increasing inflation and making the labor shortage worse, Biden’s “forgiveness” of student loans will lead to an increase in the costs of college. This means that future college students will take out even bigger student loans that they cannot repay and will need help to get out from under the loans. The better action for the federal government would be to force universities to control their costs or even lower them.
One way to lower costs is to stop offering all the degrees – such as gender studies and basket weaving – that will never benefit the students. If the degrees will not help the students to pay off their degrees, they are worthless degrees that should be discontinued. Parents should teach their children to be self-reliant and to be wise about how much money they borrow. Biden’s student loan forgiveness does not help irresponsible former students or America.