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The Student Loan Debate Is Just Beginning

President Biden’s Executive Order (EO) forgiving up to $20,000 of student debt for past borrowers is not a solution to a $1.6 Trillion student debt problem.

It is the fulfillment of a campaign promise blatantly intended to bring more “grateful” young voters to the mid-term polls this November.

Young voters are traditionally not a significant demographic in mid-term elections.

Increasing low propensity — but grateful — voter turnout in November is only one of the many potentially flawed assumptions in the President’s plan.


An Executive Order is a temporary measure intended to allow the President to act in an emergency when the Congress is not in session and/or the need for action immediate and urgent.

Created with a stroke of the President’s pen, any EO can be (and usually is) undone with an equal flourish by the next President.

Student loan debt has been a known and growing problem in this country since I was a college student. Where is the emergency?

Congress has the “power of the purse” under the Constitution. Congress legislated the existing student loan program and only Congress can legislate a “fix” to it.

Student loan forgiveness was one of the initiatives included in $3.3 Trillion Build Back Better Plan. Not just Republicans but Democrats in the Congress rejected the plan.


If Congress fails to ratify and fund a presidential policy initiative, isn’t that the end of the discussion?

Under the last several Presidents, the answer has been somewhere between maybe and, this past Wednesday, a clear ‘no”.

After asserting last year and earlier this year that he lacked the legal authority to order student loan debt forgiveness through an Executive Order, President Biden suddenly discovered he did, indeed, have such authority.

He does or he doesn’t.

Even as my fingers race across the keyboard, I am certain there are a group of enterprising lawyers shopping for the right federal district judge to obtain a nationwide injunction preventing the Department of Education from implementing the president’s order.

It could become a Supreme Court test case determining the limits of unitary executive authority under the Constitution.

Article One of the Constitution grants the sole “power of the purse” to the Congress.

Does President Biden have the authority, with a flourish of his pen, to add as much as $1T to the national debt after Congress has specifically rejected his proposed spending?


Obama Administration economist, Jason Furman (Harvard Professor) is just one of a series of prominent Democrats to speak out against the Executive Order.

Professor Furman argues that one time debt relief for some without significant reform in the college cost structure is insufficient and unwise.

He continues, in an Atlantic Magazine interview, that if one time relief was offered, it should be much more targeted, i.e., concentrated on the “80% of borrowers” who need relief the most.

The President, himself, during his press conference, argued 90% of the loan forgiveness would go to borrowers with an income under $75K a year.

Begging the question why was the benefit extended to borrowers with individual incomes of $125K and couples with an income of $250K?

Professor Furman points out under the EO a couple earning $250K — who started out with Pell Grants — will receive as much as $40K in debt forgiveness. Pell Grants, he argues, propelled these borrowers well into the middle class. If they need debt forgiveness, at all; why should it be twice the benefit of other borrowers in the same income bracket?

To put the professor’s question in context, an “adjusted gross income” of $217K puts the taxpayers into the top 5% of all US taxpayers.

The same question applies to the single professional earning $126K a year.


There are those who argue that the purpose of government is wealth transfer but those are, generally, elite academics such as Massachusetts Senator Elizabeth Warren, who is all too eager to take credit for the Biden Executive Order.

Most members of Congress and the vast majority of Americans do not agree with wealth transfer concept.

Some have tried to argue the “whataboutism” of the TARP bailout of the US auto industry in 2009 or the bank bailout following the 2008 housing bubble (burst).

The difference is one of stabilizing the overall US economy — hundreds of millions of jobs — versus improving the purchasing power of 43 million of 330 million Americans.

It’s apples and oranges.


Short of a legal injunction, this one time student loan forgiveness for some borrowers is a “done deal”.

Republicans will rail against it in the weeks before the mid-terms and Democrats will try to avoid the debate.

I am more worried about where we go from here.

The Executive Order limits the blanket debt forgiveness to existing borrowers. It excludes any loan made after June 30,2022.

Still, this year’s entering freshman college class will expect similar relief when entering the work force. What is fair for one is fair for all, wouldn’t you agree?

If past is prologue, colleges and universities will see this loan forbearance as a “green light” to increase tuition arguing it won’t (really) cost students more.

President Obama warned about ratio of more generous student loans to rising tuition costs in 2010.

He threatened action against colleges that raised student costs as a result of the new, more generous government backed loans enacted by Congress.

But neither he nor President Trump nor President Biden nor five (5) Congresses made even modest gestures toward addressing the escalating costs of a college education – even as we’ve experienced year over year declining enrollments.

Nor did they (before the CHIPS Act) even give thought to the societal or economic costs of failing to educate the 21st and 22nd century workers required to maintain our global technical and industrial leadership.

With his EO, President Biden backdoored a student loan crisis.

Now Congress must act before student loan forgiveness morphs into yet another “entitlement”.

Congressional leadership must take a bi-partisan approach to investigating the underlying reasons for the escalating cost of a college education and force reform on the college and university system rather than haphazardly bailing out some of their customers.

We’ll have more to say about academic reform in coming episodes.

2022-08-28T02:02:14+00:00August 28th, 2022|Comments Off on The Student Loan Debate Is Just Beginning

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