It might seem cruel to say, but the Supreme Court was right in striking down President Biden’s $450 billion student loan forgiveness plan. Yes, hundreds of thousands of students who thought the burden of their student loans had been lifted were greeted last Friday with the news that the SOBs on the Supreme Court—the same ones who overturned Roe v. Wade—have condemned them to a life of servitude which, many of them believe, is inherent in borrowing money to go to college.
Most of us are sympathetic to the student loan borrowers. I did not enjoy borrowing money for college but had no choice. It was either borrow or not go to law school. I also found that my student loan repayments, small when compared with what recent generations of student debtors owe, were a hindrance. Buying a new car was out of the question. Taking on more debt, even after I secured a good paying job made possible by the education I financed, seemed reckless. So, I did not do it. I even worried about being able to repay the loan if I found myself unemployed, so I paid more than the required monthly repayment amount. I printed out a loan amortization table and calculated how I could avoid future loan repayments by making prepayments.
When President Biden announced his student loan forgiveness plan, I was (correctly) not included. The idea of repaying student loan borrowers for payments made many years previously is ridiculous. Reimbursing borrowers who paid back their student loans is, however, somehow fair. Had I not had to repay my student loans, I could have saved more, and would have a lot more money today. Or perhaps I could have visited St. Petersburg and visited the Hermitage before Putin effectively closed Russia to sane Americans. You get the idea, but, fortunately, President Biden drew a line. The loan forgiveness program could have cost more than a trillion dollars if taken to its logical extreme.
President Biden was right to not include me in his student loan plan. And, but for the lack of authority to forgive part or all loans of 43 million borrowers, was right to seek loan forgiveness for student loan borrowers struggling with student loan debt. The problem, identified by the conservative majority on the Court in striking down Biden’s action, is that the law on which Biden premised his loan forgiveness plan did not allow it.
The Court majority analyzes the 2003 HEROES Act, which grants the president authority to waive or modify student loan repayment terms to respond to hardships caused by national emergencies, and concludes that it is inconceivable that Congress intended the wholesale forgiveness of $450 billion in student loans with no analysis of whether the individual borrowers identified for forgiveness needed the help. The Court’s dissenters, three liberal Justices, argued that there is no explicit limitation on the right of the president to “waive or modify” and that a waiver can be as broad as the president would like.
Following the logic of dissenters, President Biden could have forgiven every penny of student loan debt. If a child of Elon Musk, for now the world’s richest oligarch, had a student loan, the Justices could have argued, President Biden could have freed him of the nuisance of having to repay the loan.
President Biden responded to the Court’s decision by condemning it. He vows to find another way to deliver on his promise of debt forgiveness. Will Biden be able to do something? Yes. The Court’s decision recognizes the power of the president to “waive or modify.” Biden will be able to provide better-targeted loan relief to millions of borrowers.
All of us should be glad that President Biden cares so much about student loan debtors. Even though the concept of forgiving student loan debt is highly political, the reality of out-of-control student debt is real for millions of borrowers.
President Biden has executive authority to provide targeted student loan debt relief, but he needs to part company with Senator Elizabeth Warren (D-MA), the politician responsible for pushing Biden to exceed his executive authority by basing $450 billion of federal spending on what she saw as a loophole in a statute.
Congress is highly unlikely to simply go back and amend the HEROES Act with language like, “The President can declare anything he wants to be an emergency and forgive any federal debt owed by anyone, regardless of the federal costs involved or whether the forgiveness is fair or needed.” Such a “solution” would be easy. It would also be monumentally unfair, illegal, fiscally reckless, and stupid.
The brouhaha resulting from the Court striking down the Biden plan should prompt Congress and the public to take an in-depth look at the cost of higher education and the issue of how students and their families finance it. At the top of the list is addressing the problem of college costing too much. Congress must figure out a way to make college affordable without massive student loan debt. The best student loan is the one never made.
Congress also needs to face up to the reality that if you forgive current student loan borrowers’ debt, you are creating a precedent for future generations to ask for the same thing. It may be time to abolish student loans altogether and for Congress to figure out a way to make college free for most Americans. Possible? Yes. Extremely difficult? Absolutely.
The full text, including the dissenting opinion, of Biden v. Nebraska may be found here.
J.E. Dean is a retired attorney and public affairs consultant writing on politics, government, and other subjects. He is a former counsel to the Committee on Education and Labor of the U.S. House of Representatives where he worked on student loan and other higher education legislation.
Don E. Itall says
In addition to the high costs involved, potential students should take a hard look at their choice of major. Unless your studies lead to employment, choose again. No employer in their right mind will hire a candidate who majored in gender studies or the history of some obscure snail or other such nonsense. Study the unemployment numbers vs college degree. If one chooses to attend college just to broaden your mind or the learn a variety of random facts (both admirable reasons), don’t expect me to pay your way when you can’t find a job.
Chris Gordon says
Don, I understand your point. Let me add a few points. I obtained a degree in computer science from Carnegie Mellon University. It led to a very lucrative career. It put me in a position to interview and hire candidates for jobs with my company. I always chose those candidates who were the most intelligent and the most adaptable regardless of training. One of the best employees I ever had was a young woman with a degree in religious studies from MIT. Do you remember coach George Allen of the Redskins? He always drafted the best athletes, not players best suited for a particular position. I always followed his example and never regretted it.
Chris Gordon says
Free public education should be extended at least two more years. That’s impossible, as you say, with the current Congress but maybe one day.
Deirdre LaMotte says
How about bank bailouts, auto industry bailouts, Covid bailouts, oil and gas subsidies , farm subsidies, corporations that dodge US tax laws via overseas heavens.
But students? Oh no, no one ever said having an educated nation to complete globally was a good idea. LOL.
This nation needs to join the sane world of an affordable college education. And student loans are wreaking havoc with GDP since so many are strapped for money.
Bob Moores says
I must be in an agreeable mood this morning because I agree with Mr. Dean and respondents. My additions, though:
Not every kid is ready for college or mature enough to know what they want to do after high school. I was in that category. I didn’t “choose to attend college”; I went to please my parents who were paying for it.
flunking out of U-of-M, followed by three years in the army, and getting a drafting job at B&D, meant that I was 24 before I found purpose.
Even if you’re college-ready, the first major chosen is not always the last. My daughter started at UVA in engineering, switched to anthropology for year two, then biology for the last two years.
Forgiving college loans does not seem fair for those who have worked their butts off repaying their loans.
William Barron says
I, too, agree with the Supremes. Does the President actually have the authority to authorize this level of spending? Shouldn’t Congress weigh in? Can this President, elected by just a little more than half of his constituency and whose performance is approved by less than half of them behave as though he has carte blanche…..he thinks so. But his action in this matter is so wrong in so many ways.
First, it suggests to young, often first-time borrowers, that loan contracts are meaningless and that debt is not an obligation to be taken seriously. How many of these people will eventually have to learn the hard way that in the real world of car loans, credit cards and mortgages that there is no amnesty and that credit scores matter.
Second, it crosses a moral boundary and sets a terrible precedent by painting those borrowers who have diligently paid off their loans as “suckers”. And it encourages future student borrowers to game the system, expecting their debt to be eventually forgiven by presidential fiat or some other beneficent magic.
Third, most of the benefits will go to people of means who need no help making payments; 65% of student debt is owed by those earning more than the national average income; only 12% of the debt is owed by the lowest quartile of earners and, for those who struggle to make payments, there is already a program in place to relieve their obligations. It’s called the Income Driven Repayment Plan (IDR). There are more plan details than can be described here but, basically, it forgives all future interest if the borrower can’t keep up with scheduled payments so the balance never increases. Any remaining loan balance is completely forgiven after 20 years; 10 years if the balance is $12,000 or below. Of course, borrowers must apply for the benefit….how cruel! Does it seem reasonable that a family of two borrowers earning $250,000 annually should get this $20,000 taxpayer largesse; $40,000 if they were both on Pell grants? Whose crazy idea was that?
Fourth, and clearly the greatest threat to the US economy, is the inflationary impact of a sudden windfall in the pockets of borrower/consumers without a corresponding increase in the supply of stuff to buy. This, of course is the same fault found in all the President’s aggressive giveaway programs. His tone-deafness to the serious consequences of his inflationary actions suggests that he never understood Econ 101 or, more likely, that he is simply pandering to voters in advance of the mid-terms; everyone loves free stuff.
As you note, at the bottom of this issue is the steady, lethal rise in tuition and board faced by students at nearly every college and university in the country. That rise has propelled concern over student debt to the front of the line and no doubt instigated the president’s executive order. Perhaps Congress should consider a non-partisan examination of those secondary education institutions that receive taxpayer money in any form to understand the architecture that causes costs to rise so much more sharply than consumer prices. I’m not sure that a solution would arise from such a study but it would be useful to know where the pathogens are.
A single court has ruled against implementation of the President’s order; not very comforting. Electing a Republican House now will slow the liberal rush to enact even more poorly-conceived give-away legislation. But I’m deeply concerned that regardless of the outcome of November elections, we’re in for at two more years of economic chaos as this president continues to polish his “legacy” with even more clumsy executive actions.