A funny thing happened on the way to school. President Joe Biden managed to neatly sidestep a SCOTUS ruling that his “student loan forgiveness plan” was unconstitutional. He has been handing out money to borrowers without concern for the Supreme Court ruling or their reprehensible Constitution.
Biden’s initial plan aimed to provide permanent loan forgiveness of up to $20,000 for eligible borrowers, fulfilling his promise during his 2020 presidential campaign. This program would have allegedly benefited around 43 million Americans, with nearly half of their student loans “forgiven.”
Lawmakers took the unsustainable plan to the Supreme Court, where it met a horrible fate. On June 30, 2023, the court ruled that Biden’s giveaway exceeded the administration’s authority because it lacked authorization from Congress. In a 6-3 vote, the conservative justices prevailed, deeming the plan unconstitutional. Chief Justice John Roberts wrote the court’s decision, stating it was a clear interpretation of federal law.
In simple terms, the president cannot unilaterally spend public tax dollars without proper approval from Congress.
But Biden immediately ignored the ruling. After all, votes are at stake.
In late 2023, Biden labeled his new student loan forgiveness plan SAVE (Saving on a Valuable Education) and has been slowly rolling out “student loan forgiveness” ever since. Just last week, the Biden administration announced new cancellations for more than 277,000 borrowers.
The University of Pennsylvania’s Penn Wharton Budget Model recently announced the price tag for Biden’s vote-buying scheme – an astounding $559 billion of your taxpayer money. Broken down, each household in America is on the hook for $4367.19 for Biden’s student loan forgiveness plans.
And while the initial claim of the Biden administration was that student loan “forgiveness” was to help lower-income people who are struggling to pay off their debt, the latest plan benefits high-income earners. About 750,000 households making over $312,000 will have their student loans “forgiven.”
The income brackets to qualify for the plans were already absurd. Single borrowers making up to $120,000 or couples making under $240,000 a year were invited to apply.
Let’s be clear. The average personal income in the U.S. is around $63,214, while the median income, representing the middle value, is $44,225. The average in 2023 was $106,270.90 for couples.
That means most Americans are paying for “loan forgiveness” for borrowers who are making significantly more than they are.
In fact, Biden is offering relief to households only $100,000 below the $400,000 threshold he identifies as “wealthy.”
Rep. Jodey Arrington (R-TX), chairman of the House Budget Committee, has criticized the plan, describing it as unconstitutional and a “quest to buy votes.” He argued that the plan would unfairly burden all taxpayers, including many without college degrees, by shifting the responsibility of repaying loans from high-income earners onto them. Arrington accused the Biden administration of attempting to bypass the Supreme Court and Congress while adding to the country’s debt.
And yours.
Some quiet adjustments were made to Biden’s already outrageous plans.
The first adjustment involves forgiving undergraduate student debt for individuals repaying it for over 20 years or paying graduate debt for 25 years. Borrowers who began repaying their student loans on or before July 1, 2005, will have all undergraduate debt eliminated. This forgiveness date is extended to July 1, 2000, for those with any graduate debt. The relief will be automatically provided without requiring enrollment in an income-driven repayment plan.
Another adjustment pertains to the threshold for forgiving accrued and capitalized interest on loans. According to the Wharton media release, borrowers with current balances exceeding their initial balance upon entering repayment will have up to $20,000 in accrued and capitalized interest waived, regardless of their income.
Student loan borrowers have already had three years of freedom from repayment. One of Biden’s first actions was to direct the Department of Education to halt federal student loan repayments until September 2021 because of the pandemic. It wasn’t enough. The pause on loan repayments was extended multiple times to “prevent defaults” and “assist low and middle-income borrowers.”
However, a study published by the National Bureau of Economic Research found that federal student loan borrowers whose monthly payments and interest accrual were paused increased their borrowing in other areas. Instead of avoiding delinquencies, they took on additional debt through credit cards, auto loans, and mortgages.
Here’s hoping that these borrowers didn’t waste their time getting degrees in economics. They obviously didn’t get their money’s worth if they did.
Next time you’re at the doctor’s office scraping change out of your pocket to pay for the visit, remember that not only are you paying for their services, but you might have already paid for their degree, too.
