The cost of canceling student debt

by Tom Cole

President Joe Biden and Democrats’ inflationary spending spree and high-tax proposals have certainly left Americans in financially challenging times. Meanwhile, they continue to push the mass cancelation of student debt, which would undoubtedly make our nation’s inflationary crisis worse. Unfortunately, the president’s continual pause on federal student loan payments during the pandemic, turned now to an outright bailout, disproportionately benefits a few at the expense of many.

This week, the U.S. Supreme Court will hear oral arguments on President Biden’s student debt forgiveness plan to forgive up to $10,000 in federally borrowed student loans per person, or up to $20,000 if a person also received Pell Grants. The Supreme Court’s decision will determine the legality of this executive action and whether it exceeds President Biden’s authority.

The so-called cancelation of student loans is an egregious bailout for a relatively well-to-do group. While the White House argues this will benefit only those earning less than $75,000 per year, student debt cancelation is an unquestionably regressive policy proposal. When compared to Americans who have no student loans, student loan borrowers are more financially well-off, whether measured by income or by wealth. Nearly one-third of student loan debt is held by the wealthiest quartile of Americans. Moreover, a recent study from the Committee for a Responsible Federal Budget found that 57 percent to 65 percent of the student loan debt cancelation will benefit those in the top half of the income spectrum. The nonpartisan organization also argued that this policy will lead to more inflation and drive up higher education costs.

Additionally, the cancelation of these loans is fundamentally unfair. It will occur at the expense of Americans who have worked hard, repaid their debts or chosen not to go to college at all. In a country that has always rewarded hard work and personal responsibility, this move is, quite simply, unprecedented. It is also unfair to those Americans whose student loan debt would not be forgiven because it is privately held versus held by the federal government. Moreover, it is unfair to the 87 percent of Americans who do not hold federal student loan debt and will foot the bill, which the nonpartisan Congressional Budget Office (CBO) has calculated will cost taxpayers a massive $400 billion.

As Democrat lawmakers continue to push for mass student debt forgiveness, I’m proud to reintroduce the Can’t Cancel Your Own Debt Act to disqualify members of Congress from participating in federal programs enacted during their tenure to cancel student loans – whether established by executive order, agency action or an Act of Congress. It would also bar members of Congress from any service- or employment-based student loan cancelation for time served as a Member of Congress. This legislation would ensure lawmakers cannot use their position of power to benefit themselves while earning six figures annually paid for on the American taxpayers’ dime.

While I understand the high costs of attending a university can be daunting, seeking scholarships, grants and work-study programs can make this more affordable. During my time leading the House Appropriations Committee’s panel for education spending, I was proud to invest in such programs and offerings. However, the government cannot be responsible for all the debts of Americans, and if student loans are forgiven, I wonder what would be next such as home mortgages, car loans and much more.