Biden’s Student Loan Forgiveness Dodges Real Issues

By Chadwick Hagan
Chadwick Hagan
Chadwick Hagan
Chadwick Hagan is a financier, entrepreneur, author and columnist. He is a founder and director of numerous businesses and is a partner with investment banks Hagan Capital and Eaton Square Ltd. He is a fellow of the Royal Society of Arts and is based in Atlanta and London.
September 6, 2022 Updated: September 6, 2022

Commentary 

On Aug. 24, President Joe Biden announced he would forgive up to $10,000 of federal student debt and up to $20,000 of Pell Grants.

The president’s student loan forgiveness dodges real issues that need to be addressed: the issue of ongoing college tuition increases while the American higher education system simultaneously continues to be devalued.

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College tuition + fees in U.S. (avg.) (Chadwick Hagan)

The plan also evades some very real systematic issues that are causing tremendous societal problems in America—and they need to be addressed. College costs are skyrocketing, and apart from students who are in school to be architects, lawyers, or doctors, many potential students are balking at the expense of higher education in America.

Because of this, Biden and the Democrats clearly support the ongoing disparity and feeding frenzy between student debt lenders and rising tuition.

Following Biden’s announcement, Sen. Elizabeth Warren (D-Mass.) made her usual hyperbolic comments, stating on Twitter: “20 million Americans will never have to make another student loan payment. 23 million more will see lower balances. And this will mean lower monthly payments without interest piling up. I’ll always push for more, but let’s recognize how far we’ve come.”

I don’t think we’ve come far at all, to be honest. Should the president not tackle skyrocketing tuition bills so all Americans can afford college? Should he not seek to put an end to predatory student lending practices? I have included a chart that shows the stifling rise in college tuition and fees since the 1980s. It doesn’t take a Ph.D. in math to see what is going on here.

Regarding student debt, the American Bar Association states: “Both federal and private student loans are not dischargeable in bankruptcy unless you can show that your loan payment imposes an ‘undue hardship’ on you, your family, and your dependents.”

Due to the fact that student loans cannot be discharged in bankruptcy (meaning, someone saddled with student loan debt cannot shake off the debt by declaring bankruptcy), college tuition costs continue to rise at breakneck speed. Colleges know they can get away with rising tuition costs, so why would they stop?

Who Is Going to Pay for This?

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Biden White House PPP Tweets in Response … (The White House/Twitter)

Regardless, how this will be paid is anyone’s guess. Days after the Biden announcement, Fox News reported: “The White House remains mum on how it plans to pay for President Biden’s decision to cancel between $10,000 to $20,000 in student debt for some Americans or if future tax hikes will be needed to cover the proposal which, by some estimates, costs more than $500 billion.”

Is Biden even authorized to make such a decision? Tom Fitton, president of Judicial Watch, mentioned the potential criminality behind such an unauthorized move, reminding us all that “there is potential criminal liability for federal officials who authorize the spending of tax dollars in excess of those authorized by Congress.” 

What Inflation Reduction Act?

Ironically, this comes on the heels of the Inflation Reduction Act. Won’t this latest round of freebies increase inflationary pressures? Will this not add to runway inflation in the United States?

The nonpartisan Committee for a Responsible Federal Budget (CFRB) certainly thinks so. It stated that such debt relief would “wipe out the disinflationary benefits of the Inflation Reduction Act.”

The CRFB  estimates that Biden’s move will cost an “astronomical $400–600 billion,” and has also estimated that $10,000 in forgiveness would add 0.15% to the Personal Consumption Expenditures Price Index.

The CRFB added: “Combined, these policies would consume nearly 10 years of deficit reduction from the Inflation Reduction Act.”

Add to this the fact that Biden’s officials have indicated more debt relief is on its way (college debt and medical bill relief), and you have an alarming combination that seems to promise more free money in exchange for midterm election votes.

Playing Politics With American Education

Biden is throwing red meat to his base. At the very least, the Biden announcement is a pure political play to drum up Democratic support for the midterm elections.

If you disagree, take a look at tweets from the White House on August 25. The White House clearly attacked the Biden administration’s most vocal opponents. The White House literally released Paycheck Protection Program (PPP) loans information on the elected officials, without stating the fact that the loans were forgiven for valid reasons; otherwise, they would not have been forgiven, right? The tweets directly stated the following: “Congresswoman Marjorie Taylor Greene had $183,504 in PPP loans forgiven; Congressman Mike Kelly had $987,237 in PPP loans forgiven; Congressman Matt Gaetz had $482,321 in PPP loans forgiven.”

Education is vitally important to human development, and a stable and welcoming education system is vital for any nation to survive. Why are the Democrats allowing the cottage industry of student debt to continue to rake in billions of profits while cannibalizing innocent students’ hopes and aspirations? Why are Democrats focused on chipping away at the reputation of America’s higher education system?

Could it be because America’s colleges are becoming more and more radicalized as each year passes?

Chadwick Hagan is a financier, entrepreneur, author and columnist. He is a founder and director of numerous businesses and is a partner with investment banks Hagan Capital and Eaton Square Ltd. He is a fellow of the Royal Society of Arts and is based in Atlanta and London.