Desperate for any edge in his reelection campaign and under immense pressure from radical activist groups, President Joe Biden is recklessly rewriting student loan policies in a way that will end up hurting the very borrowers he claims to be helping.
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When the Supreme Court struck down Biden’s first half-trillion-dollar student debt amnesty in June, that should have been the end of the story. If Biden and the Democrats want to create a new debt forgiveness program, they should go through Congress, as the Constitution clearly requires them to do.
But to avoid getting caught flat-footed, as he was after the Dobbs decision overturned Roe v. Wade, Biden was ready with a “Plan B” to announce the very day the court issued Biden v. Nebraska. Instead of relying on emergency provisions in the 2003 HEROES Act, as he did the first time, the president announced he would issue new regulations under the Higher Education Act of 1965 to accomplish much the same thing.
Finalizing new regulations under the Higher Education Act will take months at least, and, even then, whatever final rule does become policy will be immediately challenged in federal court. Undaunted, Biden announced a separate but parallel “on ramp” policy that day allowing borrowers to continue not paying their student loans for another year.
This means Biden is sending college debtors two conflicting messages. On the one hand, the debt limit deal he agreed to in May requires the Department of Education to start collecting student loan payments this September. Education Secretary Miguel Cardona has promised a “smooth return to repayment process” in light of the signed deal.
But on the other hand, the “on ramp” deal Biden unveiled on June 39 says the opposite.
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“No one needs to make a payment until October 2024 thanks to the on-ramp,” former Sen. Bernie Sanders (I-VT) campaign staffer Melissa Byrne tweeted last month. “Literally no one pay.” Unfortunately, she is right; under Biden’s unilateral “on ramp” policy, no one need pay, despite what the president agreed when he signed the debt limit deal.
Considering that Biden is telling borrowers he will soon unveil regulations that may wipe out their debt entirely, why would any of them make payments again, as is required by law, this September? Biden’s debt ceiling deal was a bait-and-switch con.
Encouraging student debtors to remain delinquent on their loans is made worse by evidence that once debtors are allowed to skip payments, the percentage of delinquencies shoots up. In the past, when borrowers from disaster areas were allowed to skip payments, their rate of delinquency rose when they were required to start making payments again.
Since everyone agrees that the Supreme Court will invalidate Biden’s Plan B amnesty just as it did the first, it is clear that Biden is, for purely political gain, merely delaying and worsening the inevitable reckoning.
Student debt amnesties are terrible policy for many reasons, including the fact that they only encourage colleges and universities to raise prices even further, pushing even more students into debt. Biden’s temporary debt amnesties are worse because they encourage debtors to get into the habit of not paying their debts, which produces worse delinquencies in the future.
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Real higher education reform that holds institutions accountable for the unpaid debt of their students and expands subsidies to apprenticeship and technical education programs are what is needed. Unilateral debt amnesties paper over the failures of a severely ailing system, and in doing so make its problems and failings worse.
