Biden’s Illegal Student Debt Bailout Struck Down

BIDEN BLOCKED FROM BAILING OUT THE WEALTHY AT THE EXPENSE OF THE WORKING CLASS

• Today, the Supreme Court struck down Biden’s student loan bailout  by a 6-3 vote, ruling that he clearly does not have the power to unilaterally cancel student debt under the law.
  • By striking down Biden’s student debt bailout, the Court has thwarted a dangerous precedent that would abuse presidential power.
• Biden wanted to unilaterally cancel up to $10,000 of student debt per borrower, a handout to the rich that would have cost taxpayers billions and worsened inflation.
  • According to the Penn Wharton Budget Model, Biden’s student loan bailout “could [have] exceed[ed] $1 trillion,” with the majority of the benefits going to the top 60 percent of earners.
  • The National Taxpayers Union Foundation predicted that Biden’s bailout would have burdened the average taxpayer with roughly $2,500.
  • Biden’s plan to cancel student debt would have immediately increased inflation and “create[d] additional inflationary pressure over time.”
• Biden’s plan to cancel billions in student debt would have benefited the wealthy while doing “little to help future college students, borrowers who have already paid off their loans and those who never went to college in the first place.”

BIDEN’S STUDENT LOAN PAUSE HAS ALREADY COST TAXPAYERS BILLIONS

• Biden labeled his plan as “forgiveness,” but in reality, it simply would have transferred the burden onto the backs of taxpayers.
• The current pause on student loan payments has cost American taxpayers nearly $300 billion, with “most of these costs” accruing under the Biden administration.
  • The payment pause costs taxpayers $5 billion per month.
• Biden’s pause on student loan repayments is “an extremely regressive policy, and each month the pause is extended the policy becomes more cumulatively regressive.”
  • By stopping interest accumulation, the student loan moratorium “effectively cancels some debt.”
• Higher income earners have benefited the most from this pause despite the White House’s claim that 90 percent of their planned relief would go to families with incomes less than $75,000.
  • Families with incomes greater than $75,000 have enjoyed more than 65 percent of the relief from the paused payments.
  • The top 20 percent of households have received nearly 30 percent of the benefit while only accounting for 16 percent of families with federal student debt.

CANCELING STUDENT DEBT WOULD HAVE BEEN A HANDOUT TO THE WEALTHY

• Canceling student debt would worsen economic inequality as nearly two-thirds of all student debt is owed by the top 40 percent of households.
  • “All serious economists agree” that student loan forgiveness is regressive.
  • Brookings Institution Senior Fellow Adam Looney: a blanket student loan cancellation would be the equivalent of “a tax cut for high-income, college-educated households.”
• For many low-income borrowers, $10,000 debt cancellation would have “zero impact on their monthly student loan payments.”
• Student loan cancellation has been referred to as “a giant welfare program for the bourgeoisie” because 40 percent of student debt is held by students with advanced degrees such as doctors and lawyers. 
  • Biden has even acknowledged that Democrats’ student loan policies would “disproportionately benefit students who go to ‘elite’ private colleges.”

WHO BENEFITS? DEMOCRATS AND THEIR STAFF

• Far-left Democrats in Congress who support student debt cancellation, including Reps. Alexandria Ocasio-Cortez, Jamaal Bowman, Rashida Tlaib, and Ilhan Omar, would have all benefited from Biden’s plan.
  • Despite making $174,000 per year, these Democrats want taxpayers to foot the bill for their debt.
• At least 30 of Biden’s White House aides have student loan debt, meaning they stood to directly benefit from Biden’s action.
• Once Americans consider the trade-offs and learn who benefits from student loan cancellation, it becomes deeply unpopular.
  • 64 percent of Americans oppose cancellation if it raises their taxes.
  • 76 percent of Americans oppose cancellation if it causes universities to raise their tuition and fees.
  • 68 percent of Americans oppose cancellation if it primarily benefits the wealthy.

STUDENT DEBT CANCELLATION WOULD HAVE WORSENED INFLATION

• Canceling student debt would have increased inflation according to the Committee for a Responsible Federal Budget.
  • Americans are already paying more for just about everything thanks to Bidenflation.
• A CNBC survey from last year found that 59 percent of Americans worry that student loan forgiveness would worsen Bidenflation.
• Even liberal economists have said that canceling student debt makes inflation worse.
  • Obama economist Larry Summers: “student loan debt relief is spending that raises demand and increases inflation.”
  • Former top Obama economic advisor Jason Furman: “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”

BIDEN’S BAILOUT WOULD HAVE BEEN UNFAIR TO FUTURE STUDENTS AND THOSE WHO PAID OFF THEIR DEBTS

• Experts across the political spectrum agree that Biden’s plan for student debt would have been unfair to those without a college degree and those who have already paid off their student debt.
  • Former chief economist at the Department of Labor, Diana Furchtgott-Roth: “Forgiving student loans is unfair to students who have paid off their loans; unfair to students who have chosen less expensive community college options; unfair to taxpayers whose dollars are paying off the loans and who have no college education.”
  • Economics professor at Ohio Northern University, David McClough: “Debt forgiveness is not fair, but more importantly, it is bad policy. It distorts incentives and encourages behavior that contributed to the ‘problem’ that it seeks to address.”
  • Economics professor at University of Wisconsin-Milwaukee, Rebecca Neumann: “Simply eliminating a particular balance can be seen by some as unfairly advantaging those who have gone to college at the expense of those who have not.”
• Canceling student debt would “do little to help future college students, borrowers who have already paid off their loans and those who never went to college in the first place.”
• Biden’s proposal would have unfairly forced Americans who made a “conscious decision not to attend college to avoid debt” to pay off the loans of those who did.
• Biden’s Education Department would not have required proof of income at the time of application for those applying for a bailout.
  • Experts warn the program was “ripe for mass-scale fraud and abuse.”

BIDEN’S PLAN DID NOTHING TO MAKE COLLEGE MORE AFFORDABLE

• The move would have increased the cost of college and created a “moral hazard” for all future students.
  • Experts warn that Biden’s plan would have led to more Americans taking out students loans with the expectation their loans will be forgiven in the future, encouraging colleges to raise tuition even higher.
• Canceling student loans would have penalized those who responsibly budgeted to pay off their loans.
  • Carlo Salerno of CampusLogic said, “it would reward the person who ‘borrows to get a Ferrari over the one who got a Kia.’”
• Biden’s plan would have been a “one-time mechanism” that did not address the root problem of the high cost of education.