The Supreme Court taught college students and grads a harsh fiscal lesson on Friday: When you take out a loan, you have to pay it back.
As reported, a once-again divided Supreme Court iced President Joe Biden’s plan to cancel or reduce federal student loan debts for millions of Americans.
The 6–3 decision, with conservative justices in the majority, said the Biden administration overstepped its authority with the plan to forgive up to $20,000 in student loan debt. Borrowers have to resume payments in the fall.
Reactions from the progressive politicians who pushed this plan were as expected: Sen. Elizabeth Warren tweeted “More than 40 million hard working Americans are waiting for the help that President Biden promised them, and they expect this administration to throw everything they’ve got into the fight until they make good on this commitment.”
Then there’s this post from Rep. Jim McGovern: “It’s no surprise that the same corrupt majority on the Supreme Court that overturned abortion rights, stripped environmental regulations, weakened labor protections & loosened gun laws has now decided that going to college should remain a debt sentence for millions of borrowers.”
The concept of a “debt sentence” is an interesting one — when students repay debt they’ve taken on to go to college, that’s bad, but when taxpayers foot the bill, it’s fine.
The nonpartisan Congressional Budget Office announced last year that the plan would cost some $400 billion if implemented. While student borrowers would get a boost, so would the deficit.
The House Ways and Means Committee cited Larry Summers, a top economic adviser to Barack Obama, who sounded the alarm that Biden’s student loan forgiveness scheme would worsen inflation: “Student loan relief is not free. It would be paid for. Part of it would be paid for by the 87 percent of Americans who do not benefit but lose out from inflation,” said Summers.
That’s the crux: Forgiving student debt would not make the money owed disappear, it would ultimately be shifted to taxpayers.
Biden’s cheerleaders on student debt forgiveness cite the burden of paying off huge loans while trying to save for a house, or planning for children.
What’s needed are programs in fiscal literacy for students before they sign the first loan contract. Will this degree lead to a job with which I can reasonably pay back these loans? Are there less expensive programs at other schools? And what exactly am I getting for this money — these are all questions student borrowers need to ask.
The real problem is the often exorbitant cost of a college education, something that loan forgiveness would do nothing to reduce.
Progressive pols are signaling that they won’t back down on the fight to forgive student loan debts — it’s a key point of many Democratic campaigns.
They cite “hard-working Americans” — but who are they talking about? The ones who signed for big loans and must repay them, or the ones who paid theirs off or who didn’t take the college route, but must nonetheless foot the bill?
