SUBRAMANIAN: Biden's debt relief program is dangerous
Column: Whadda I Know
On August 24, President Joseph R. Biden Jr. announced his plan to cancel student loan debts from more than 45 million Americans. In a fact sheet released from the White House, it states that “Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity.”
But in my opinion, Biden’s plan is going to be more disadvantageous in the long run and could end up hurting the people that need help the most.
The main problem with this debt relief package is that it is going to significantly benefit those that are wealthy and will be a transfer of wealth from the lower class to the upper class. Approximately 70 percent of the debt relief will go to people in the top 60 percent of income earners, according to a University of Pennsylvania budget model.
Furthermore, the Urban Institute, a left-leaning think tank, found that the top quartile of income earners carry 34 percent of the debt whereas the bottom quartile has only 12 percent of the debt. What this means is that the taxpayer money used to relieve student loan debts is going to the richest Americans and taking money away from lower and middle-class Americans.
In addition to the regressive nature of the debt relief plan, what students should also be concerned about is that the debt relief is probably not even going to reach them due to its unconstitutional nature. On July 28, 2021, Sen. Nancy Pelosi (D-Calif.) stated that "people think that the president of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress.”
Similarly, a memorandum in the Department of Education to former Secretary of Education Betsy DeVos, stated that the “secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge or forgiveness of student loan principal balances, and/or to materially modify the repayment amounts or terms thereof, whether due to the ... pandemic or for any other reason."
Though the memo is not legally binding, it does enforce the idea that the Department of Education cannot simply cancel student debt relief, especially as many progressives clamor for debt relief to happen.
The Biden administration’s counter to that claim is the Higher Education Relief Opportunities for Students Act of 2003 (HEROES) which allows the secretary of education to provide relief to someone that has suffered direct economic hardship as a result of war or other military operation or national emergency.
This bill was used by Former President Donald J. Trump to pause student loan repayments during the pandemic. The pandemic, though, can no longer be used as justification for student debt relief as the novel coronavirus disease (COVID-19) has largely been defeated, with the Centers for Disease Control and Prevention no longer recommending social distancing and quarantining as well as 95 percent of Americans 16 and older have acquired some kind of immunity.
Not to mention, it is hard to determine who the affected individuals are that the HEROES Act mentions who have suffered.
As Rich Lowry, editor-in-chief of the National Review, states “What with the cascade of spending from Washington amounting to trillions of dollars, including direct checks and supplemental unemployment benefits, some people were better off during the pandemic. And what about students whose parents worked as executives for the big winners during the pandemic, say, Moderna, Netflix or Zoom?
"Their families might have experienced windfalls … what justification is there under the HEROES act for having a completely arbitrary income cap of $125,000 for individuals and $250,000 for couples? Did no one making $125,001 suffer direct harm from the pandemic?”
If this student debt relief plan ends up in front of the Supreme Court, it would most likely be the end of it entirely. The Court of Chief Justice John Roberts, in recent memory, has crammed down on the powers of the executive branch in many cases.
For example, in the National Federation of Independent Business v. Department of Labor, Occupational Safety and Health Administration, the court ruled that the Department of Labor could not enforce a vaccine mandate on businesses with at least 100 employees and that only Congress had the power to do so. This idea gets reinforced in West Virginia v. Environmental Protection Agency (EPA) where the court ruled that the EPA had to prove that there was clear congressional authorization to regulate greenhouse gasses.
Simply put, Biden’s plans for canceling student loan debt missed the mark on fixing a very broken system by bailing out wealthy Americans and breaking the Constitution to do so. Students across America deserve better than a last-minute attempt to shore up votes for the midterms.
Policies such as increasing taxes on university endowments (Rutgers' endowment is $1.98 billion) and finding ways to incentivize apprenticeships and alternatives to college would go much farther toward fixing the broken system of student loans than what the White House plans to do. But hey, whadda I know?
Kiran Subramanian is a junior in the School of Arts and Sciences majoring in economics and political science. His column, "Whadda I Know," runs on alternate Tuesdays.
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