Is President Biden’s regurgitated plan to eliminate student loan repayments for real? Ostensibly so.
Biden may believe his latest efforts on the matter – which ignore rulings from the U.S. Supreme Court – label him as a driven, fearless, trend-setting, unprecedented leader. In reality, these actions are simply indiscreet and point to a decline in American greatness.
The Feds began guaranteeing student loans with funding provided by the private sector through the Federal Family Education Loan (FFEL) program initiated by Congress in 1965. This work continued in one form or another under Presidents Bush and Clinton, assuring greater collegiate opportunity for those with limited finances.
As a lad from a single parent home, my college efforts needed assistance. Working 30 hours a week was not enough, so during my sophomore year in 1967 my father arranged for a bank student loan. In retrospect, it was a great value, and repaying the $4,000 loan completely by 1985 was akin to the Friday trek to Tiger Package for a case of PBR … it was automatic and just something we did.
Though times have changed, principles have not.
In 2009, President Obama proposed eliminating this program, “as subsidies paid to private lenders were unnecessary and cost savings could be achieved if all federal student loans were made through the direct loan program.” In other words, he thought Washington could do student loans more efficiently, offering an estimated savings of $68.7 billion by 2020 according to Congressional Budget Office estimates.
Was there a savings to the feds of $68.7 billion by 2020? Has there been sufficient accountability and oversight of this program since 2010? The answer to both is no.
This brings us back to our present problem of Biden and mass student loan forgiveness.
Instead of forgiving all these loans, what would happen if we returned the loan program to the private sector, as it was before Obama made changes? In speaking with several bankers, I’ve found that they agree with the theory that if Congress would consent to place the loan program back in the hands of industry and the private sector, the appetite of the private sector for such work would return, provided the design and policies be formulated by private lenders and approved by Congress. These bankers remember very few defaults during the several decades of the original loan program, so this solution appears to be worth pursuing.
It is time to wake up to reality. The umbrella over this false economic thesis affects the forgiven, those who never attended college, and every other American. Presuming America eventually eliminates or greatly reduces our national debt, all these people will pay it back over time. This giveaway does not remove the burden of arresting our arrears.
The Biden administration has already canceled $138 billion in student loans, with several other programs in the works to forgive even more. That $138 billion of revenue to Washington has vanished, transposed into more national debt. Regardless of how the “forgiven” utilize or invest those unpaid payments, the return and tax revenue would not amount to a scintilla of the $138 billion. Not a smidgen.
Does every barrel have a bottom? Yes, of course. Perhaps it’s crazy, but faith remains that Congress will block any attempt by Biden to forgive student debt and demonstrate unfeigned accountability.
Allen Harris is a businessman, no stranger to the political arena and is involved heavily in state workforce development. He can be reached at allenharris593@gmail.com.
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to Commentary@1819News.com.
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