The Biden administration should stop its “morally questionable” efforts to cancel student loan debt, says Sen. Mitt Romney, as he leads an effort to do just that.
Romney, R-UT, has reintroduced the Student Loan Accountability Act to prevent the administration from continuing its efforts. Sens. Bill Cassidy, R-LA, Tim Scott, R-SC and Thom Tillis, R-NC are also sponsors on the bill. The bill says Congress, not the executive branch, has authority to cancel debt and also says student loan debt unfairly punts the burden onto taxpayers who may have already paid off their loans or did not attend college.
The news comes as the Biden administration plans to implement another sweeping attempt to enact more student loan forgiveness. The administration touted that its work has already led to more than $168 billion in student loan forgiveness and said its next steps will result in further student loan forgiveness. Borrowers will be contacted Thursday about the plan and given the option to opt-out of forgiveness if they contact their servicer by Aug. 30.
The Committee for a Responsible Federal Budget estimates the sum total of the Biden administration’s student loan forgiveness program will cost $870 billion to $1.4 trillion. “That’s more than all federal spending on higher education over the nation’s entire history,” said the organization, adding, “As we’ve explained before, most of these student debt cancellation policies have not only been costly, but also inflationary, poorly targeted, counter to the mission of lowering college costs, and not financially justified.”
U.S. Education Secretary of Education Miguel Cardona said the Biden administration has committed to delivering as much debt relief to student loan borrowers as possible. But the lawmakers who are reintroducing the bill say the administration has acted unconstitutionally.
“Despite the Supreme Court’s ruling last summer that President Biden’s student loan forgiveness proposal was unconstitutional, the White House continues to cancel student loans and publicly entertain additional cancellation policies,” said Romney.
“Not only are the Biden Administration’s student loan cancellation schemes morally questionable—forcing hardworking Americans who have already repaid their loans or decided to pursue alternative education paths to foot others’ bills—these policies are wildly inflationary, fiscally reckless, and do nothing to actually address the real problem of increasing higher education costs,” Romney continued.
Calling the Biden administration plan misguided, regressive and unconstitutional, Scott said, “There is no reality where hardworking taxpayers should foot the bill for someone else’s degree and be slapped with loans they didn’t sign up for. Unfortunately, the Biden-Harris administration’s political pandering continues to rear its ugly head and continues to harm the exact people they are claiming to help.”
Cassidy said, “These schemes are nothing more than an attempt to buy votes before an election at the expense of taxpayers.” And Tillis said he is proud to hold Biden accountable and lawmakers must address the root cause of surging costs around higher education.
Who benefits from student loan forgiveness?
Some research shows wealthier families are more likely to benefit from student loan forgiveness. A 2022 paper from the left-leaning Brookings Institute found almost one-third of all student debt is owed by the wealthiest 20 percent of households in the country. By contrast, the bottom 20 percent owe around 8 percent of student loan debt.
“Universal debt forgiveness, the expectation of future debt forgiveness, or universal free college would transfer huge amounts of wealth to high-income families, increasing wealth gaps rather than reducing them,” Adam Looney wrote in the Brookings report, adding student loan forgiveness programs would not reduce inequities in higher education.
“In short, beneficiaries of across-the-board student loan forgiveness would be higher income, better educated, and more likely to be white than beneficiaries of just about all other programs designed to reduce hardship and promote opportunity and targeted to those who need help,” Looney wrote.
Nat Malkus, senior fellow and deputy director of education policy studies at the right-leaning American Enterprise Institute, did the math and found that student loan forgiveness costs each household in the country around $3,000.
“President Biden promised his supporters he would cancel loans, and despite what many of his detractors on the left suggest, he has already cancelled a lot of debt,” wrote Malkus. “If you oppose loan forgiveness on principle, you will see this as a bad thing. However, if you support it in principle, you should really think about how much debt cancellation you are willing to bear. It’s not an abstract question.”
Writing for the libertarian think tank Cato Institute, educational freedom research fellow Andrew Gillen keeps a running list of all plans the administration has implemented so far. He said the Biden administration has been the most aggressive on this issue out of any administration in American history.
“Despite many setbacks, the administration has cancelled a massive amount of debt ($167 billion and counting), with most of the burden on taxpayers still to come from future repayments that will no longer be made,” Gillen wrote. “And while many of its attempts to forgive student loans have been stymied, there are still many active plans in play, with more on the horizon.”