Student loan forgiveness
Democrats dissembled about the costs of their student loan takeover in 2010, and now they’re deceiving Americans about their drive for student debt cancellation. But South Carolina Rep. Jim Clyburn, a member of the House Democratic leadership, gave away the game over the weekend.
Progressives seem to have figured out that sweeping student loan forgiveness isn’t popular with Americans who didn’t go to college or who repaid their loans. Hence they now say that canceling $50,000 per borrower will be a boon for the working class. Sen. Elizabeth Warren says 40% of borrowers with student loan debt never completed college. If she were a company, the Federal Trade Commission could sue her for false advertising.
More than half of borrowers owe less than $20,000 in debt. The borrowers Democrats really want to help are white-collar workers with advanced degrees who account for 56% of the $1.6 trillion in federal student debt. Mr. Clyburn said as much in an interview with Bloomberg: “When you see a student coming out of college—law school or professional schools—with $130,000, $150,000 in debt, that cripples the economy in more ways than one.”
Wasn’t higher education supposed to be an investment? Well, it’s not paying off for millions of Americans, especially those with expensive graduate degrees. Many colleges require students to fund their PhDs—which can take six to seven years to complete—yet doctorate recipients in the humanities in 2019 earned $53,000 on average. Machinists make more.
Mr. Clyburn may also be trying to assist historically black college and universities with less than stellar student outcomes. Morris College in Sumter, S.C., has a 25% graduation rate. The median earnings for a borrower who enrolled a decade ago is $27,644, and debt for those who completed their degrees is $31,450. Some 97% of borrowers aren’t paying down their loans.
Progressives also claim that President Biden has legal authority to cancel debt. He doesn’t. But they want him to do it anyway and dare courts to stop him. As Mr. Clyburn explained, “So my whole thing is, use your executive authority and let the courts have at it.”
This seems to be the Administration’s guiding legal principle. Do what you want until the courts say it’s illegal. Recall its illegal eviction moratorium and vaccine and mask mandates.
Mr. Clyburn was less forthright in claiming that “students are deserving” of loan forgiveness because “the forces that be have ratcheted up interest and all sorts of fees on student loans.” Fact check: Student loan interest rates have fallen by about half since 2008 thanks to “the forces that be” on Capitol Hill.
Congress in 2013 slashed interest rates on student debt after Ms. Warren howled that the feds were making money off student loans by charging borrowers higher interest than federal borrowing costs. This was another sham. Lower interest rates merely served as another subsidy for colleges, allowing them to load borrowers with more debt.
Now the feds are losing tens of billions of dollars because many borrowers have taken on so much debt they can’t make even the smaller interest payments. So now Democrats want to bail out the underemployed borrowers they and colleges duped.
To avoid the appearance of helping the affluent, Mr. Biden is considering limiting loan forgiveness to borrowers making up to $150,000 ($300,000 for couples). Yet this would still cover 97% of all borrower debt, including most recent law and medical school grads. The student loan con goes on and on.