P.T. Barnum would be impressed by the ruses the Biden administration continues to pass off to the American public. This time, President Joe Biden is trapped in a “fool me once, shame on you, fool me twice, shame on me” situation. Besides being blatantly unconstitutional, his student loan forgiveness proposal is a ruse, a sham and a petard likely to blow up in November.
Offer our leaders in D.C. a tool to pander and they will grab it with both hands without thinking. In this case, the tool has two sharp points. One might get the support of those getting yet another freebie from Big Brother, but the other end has pierced and rightly outraged everyone else. This might be a fine example of Shakespeare’s Hamlet suggesting that the plotting Claudius will be “hoist on his own petard”.
Let me start by disabusing the notion that forgiving student loans is forgiving loans taken only to pay tuition, which is how the media portrays this. This is a highly- complex issue, so the news dumbs it down so even those with little understanding of higher education finance can readily understand it. We all know what a loan is, and we all know that taking a loan comes with the obligation to pay it back; however, not in this case. Biden wants to be Santa Claus for a select group of borrowers, albeit totally absent any public policy reasons.
If the feds seek to forgive Pell Grant recipients at the $20,000 freebie level, have they analyzed where these students went to school, if they completed any credit hours, and how much progress they made towards a degree or a certificate? I participated in an earlier study that showed that many students enroll, sign up for credit hours, and never attend classes or just fade away. However, while they were in school and could show they had enrolled, they managed to have funds deposited in their name through Pell. They likely also applied for a “loan.” Students have abused this system for years, using the programs to supplement their lifestyle needs. Is Biden going to offer wholesale forgiveness to anyone owing money, regardless of how it was used, and how far the borrower had made progress towards completing their chosen program?
Secondly, the reality is that students borrowing are largely getting the money to support their lifestyles, especially in a low public tuition state like Florida. The taxpayers of Florida are already paying for most, if not all, of each enrolled student’s degrees at public universities and colleges. Florida’s public tuitions cover only a tiny portion of the actual costs of education at the college or university level. Thankfully, leadership has chosen to hold those tuition costs low over the past decade. Costs are costs. Costs have been rising across our economy. If college students pay the same year after year for tuition, then rising costs are being paid out of other pockets–in this case, the taxpayers. In Florida, we also have Bright Futures, a public revenue-paid program that eliminates tuition costs for qualifying students. It is a strong program, and I support it, but I also think those who are screaming about who is going to pay for all those forgiven loans should also understand what it is they pay for now.
Most of the loans are lifestyle loans. Students who take out loans, pay for apartments, insurance, food, clothing and general living expenses, using these funds for all of the necessities and, maybe, some things not exactly necessary. Drive through a major university parking garage where students park. Then drive through the ones where faculty and staff park. The difference is stunning!
An easy analysis is to compare loans taken by students attending private not-for-profit institutions against those taken by students in public institutions. One might expect that private college students borrow exponentially higher, especially when you know how many students in public schools pay little or no tuition. One strong example is the University of Florida, one of the highest-ranked institutions in the country, where about 93 percent of the students receive Bright Futures. Would it surprise you that the difference in graduating borrowers is only about $2,000 yearly? How could that be when the tuition differences are so significant? Private institutions, which generally enroll larger percentages of lower income or Pell-eligible students, also offer substantial tuition discounting, grants, aid, work-study and other programs helping to make attendance possible. Students in all kinds of schools borrow to live. It is not all about tuition!
But back to this ridiculous forgiveness proposal. There is no forgiveness on the amounts owed, only for the borrower and only if they meet an arbitrary income level. The money has already been spent, and only the debt remains. In large part, thanks to the Obama administration, the primary lender is the federal government–or you the taxpayers. So, who gets left holding the bag? Why you, of course! Here is an advisory. Look out for the fine print. Watch how they use this to employ other shenanigans, such as offering forgiveness to other students if they take public service jobs instead of payment. They already do this with Stafford Loans and other programs if, for example, the graduate works for the government or a non-profit entity. If you work for evil private enterprise, too bad! You still owe it all and can not work off anything. Look at for-profit and not-for-profit hospitals. The work might be the same, and the patients served might be the same, but one doctor or nurse gets loans subsidized or forgiven and the other doesn’t.
I could write all day on this topic but suffice to say, this is pandering of the worst sort by Biden and is likely to be overturned in the courts. In the meantime, this administration will shovel out all the heifer dust they think you can stand. This is bad public policy with no good reasons other than pandering to a small group of borrowers. I am hoping those not having loans at all (close to 50 percent of Florida’s undergraduates do not owe anything upon graduation), and those who borrowed to start a business, or buy needed vehicles, etc., remember this: today, someone else is having a great day at your expense!
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