Biden’s Student Loan Forgiveness Plan Is a Joke (And Not a Funny One)

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Blog Post Summary

TL;DR

  • This blog post is a critique of Biden's student loan forgiveness plan, which I believe is insulting. The plan is too narrow, too slow, and too unfair to benefit most borrowers.
  • The plan only applies to borrowers with total and permanent disability (TPD), a small fraction of debt holders.
  • The plan fails to address root causes like rising college costs, predatory lenders, and insufficient repayment options.
  • No relief for borrowers affected by COVID-19, despite unemployment and financial challenges.
  • The plan is unfair to those who already paid loans and those not disabled but facing hardship.
  • Biden's plan contradicts campaign promises, giving in to pressure from Republicans and Wall Street.

Ways We Can Help

  1. Contact your representatives demand a more comprehensive and equitable student loan forgiveness plan.
  2. Consider alternative solutions:
    a. Canceling all or most student debt,
    b. Making public colleges tuition-free, and
    c. Reforming the student loan system.


Candid thoughts before we begin: 

  • Student loans: the financial boomerang that keeps coming back, no matter how hard you throw it away. 
    • Some say death is the only escape, but even the Grim Reaper checks your credit score these days. Jokes aside, I would rather die than pay back my student loans. 
  • Enter President Joe Biden, with a joke plan to forgive student debt that's about as effective as using a sieve to bail water from a sinking ship. If you were hoping for a life raft, prepare for a pool noodle. (FYI, this is a sieve. I know you wanted to google it.)

  • Grab your favorite overpriced, never-used textbook, and let's dive head-first into the shallow end of political promises!!
  • Spoiler alert: keep your water wings on because we are FUCKED. 

Let's begin. 

If you're one of the 45 million Americans who owe student loans, you might have been excited to hear that President Joe Biden has announced a plan to forgive some of your debt. After all, he promised to cancel $10,000 of student debt for every borrower during his campaign, right?

Well, don't get your hopes up too high. Because Biden's plan is not only disappointing, but downright insulting.

What is Biden's plan?

Biden's plan is to wipe out student loan debt for 804,000 borrowers who have a total and permanent disability (TPD). This means that these borrowers will no longer have to repay their federal student loans or pay taxes on the forgiven amount.


Sounds great, right? Well, not so fast.

 

First of all, this plan only affects a tiny fraction of the student loan borrowers in the country. According to the Department of Education [2], there are about 8.7 million borrowers who are eligible for a TPD discharge, but only about 323,000 have applied for it. That means that there are still millions of disabled borrowers who are either unaware of this option or unable to navigate the complex and burdensome application process.

Secondly, this plan does nothing for the vast majority of student loan borrowers who are not disabled, but still struggling to pay off their debt. According to the Federal Reserve , the average student loan debt in 2020 was $37,693, and the total outstanding student debt was $1.6 trillion. 


That's more than the GDP of Canada!


And let's not forget that student loan debt is not just a financial burden, but also a social and psychological one. 

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Studies have shown that student debt can negatively affect mental health, physical health, marriage, homeownership, entrepreneurship, and retirement savings.

1. So why is Biden ignoring the plight of millions of Americans who are drowning in student debt?

 2. And why is he breaking his promise to cancel $10,000 of debt for every borrower?


Why Biden's plan is a joke

Biden's plan is a joke because it is not only inadequate, but also unfair and unwise.

  • It is inadequate because it does not address the root causes of the student debt crisis, which are the skyrocketing costs of higher education and the lack of adequate financial aid and support for students. 
    • As CNN opinion writer Charlie Dent pointed out , "Student loan debt relief is spending that raises demand and increases inflation… It will tend to be inflationary by raising tuitions." 
    • In other words, forgiving some debt without reforming the system will only create more debt in the future.
  • It is unfair because it creates a moral hazard and a sense of resentment among borrowers who do not qualify for forgiveness. 
    • As Sen. Roy Blunt of Missouri argued , "Transferring the obligations of people who incurred student loan debts to millions of working taxpayers whose own debts or loans were never forgiven is not only unfair but politically perilous." 
    • Why should some borrowers get a free pass while others have to pay back every penny? And what about those who never went to college or paid off their loans already? Do they get any compensation or recognition?
  • It is unwise because it exceeds Biden's legal authority and sets a dangerous precedent for executive overreach. 
    • As The Washington Post editorial board warned, "The president has no power to spend money that Congress has not appropriated or to cancel debts that Congress has authorized." 
    • By bypassing Congress and using an executive order to forgive billions of dollars of debt, Biden is violating the separation of powers and inviting legal challenges and political backlash.

What should Biden do instead?

1. Biden should do what he promised to do during his campaign: cancel $10,000 of student debt for every borrower.


*** regardless of their income or disability status *** 

 

This would be a simple and effective way to provide relief to millions of Americans who are suffering from the pandemic and the economic downturn.

 

2. But he should not stop there. He should also work with Congress to pass legislation that would make public colleges tuition-free for low- and middle-income families, expand Pell Grants and other forms of financial aid, cap interest rates on student loans, simplify repayment plans, and crack down on predatory lenders and for-profit colleges.

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<<< These are NOT radical ideas >>> 

They are common-sense solutions that would make higher education more accessible and affordable for everyone, and reduce the need for borrowing in the first place.

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To summarize this idiocy:

Biden's student loan forgiveness plan for disabled borrowers is a joke. It is too little, too late, and too selective. It does not help the majority of student loan borrowers who are struggling to pay off their debt. It does not address the underlying problems of the higher education system. And it does not have the legal or moral authority to be implemented.

If Biden really wants to help Americans with student debt, he should cancel $10,000 of debt for every borrower, and work with Congress to reform the higher education system. That would be a plan worth cheering for.

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References

  • MSN. (2023, August 16). Judge dismisses suit to halt Biden's student debt relief for longtime borrowers. Retrieved from https://www.msn.com/en-us/news/politics/judge-dismisses-suit-to-halt-biden-s-student-debt-relief-for-longtime-borrowers/ar-AA1fh9yx
  • MSN. (2023, August 16). Borrowers should avoid getting hopes up for Biden's next round of student loan forgiveness, expert says. Retrieved from https://www.msn.com/en-us/money/markets/borrowers-should-avoid-getting-hopes-up-for-bidens-next-round-of-student-loan-forgiveness-expert-says/ar-AA1eGLLo
  • MSN. (2023, August 16). Conservative Justice Clarence Thomas took lavish vacations with a billionaire who criticized student loan forgiveness months before the Supreme Court struck it down, new report says. Retrieved from https://www.msn.com/en-us/money/careersandeducation/conservative-justice-clarence-thomas-took-lavish-vacations-with-a-billionaire-who-criticized-student-loan-forgiveness-months-before-the-supreme-court-struck-it-down-new-report-says/ar-AA1f6lET
  • CNN. (2022, August 26). Biden student loan forgiveness unfair: Dent. Retrieved from https://www.cnn.com/2022/08/26/opinions/biden-student-loan-forgiveness-unfair-dent/index.html
  • The Washington Post. (2022, August 24). Biden student loan forgiveness good start. Retrieved from https://www.washingtonpost.com/opinions/2022/08/24/biden-student-loan-forgiveness-good-start/
  • CNN. (2023, June 14). Biden student loan forgiveness Supreme Court. Retrieved from https://www.cnn.com/2023/06/14/politics/biden-student-loan-forgiveness-supreme-court/index.html

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