Robbing Peter to pay Paul for Jenny

Government's largess which really isn't.

Yesterday the Biden Administration announced student debt forgiveness to the tune of $7.7 billion. In a peculiarly timed “October surprise,” the measure will affect up to 460,000 student borrowers now working in the public and non-profit sectors.

President Biden even surfaced to surprise a teacher in Rhode Island with the news, telling her that she is $46,000 richer. The optics were perfect, putting a grateful face onto a federal program, Public Service Loan Forgiveness, which forgives student debt after at least 10 years of repayment. Since 2007 the program has been mired in inefficiency, approving only 2% of applicants until overhauled in 2021. Yet when government tries to direct attention to one matter, discerning citizens need to look a level deeper towards that which government is trying not to highlight.

Dealing only with the numbers introduced thus far, around 460,000 borrowers chose overpriced degrees and underpaid professions such that they still struggle with debt 10 years later. Now citizens who exercised greater financial responsibility, such as by opting for less expensive education, more lucrative degrees/professions, or even avoiding college altogether, are penalized through taxation to remedy these borrowers’ bad choices. This is redistribution at its worst in that it siphons money from society’s more successful producers, to those whose output has been subpar.

But more is at play in this situation, because the grateful teacher being enriched by President Biden’s largess is a mere illusion. What is really underway is that this teacher’s student loan underwriter is getting the infusion of $7.7 billion. These entities have been underwriting degrees which their forecasts have undoubtedly shown are bad investments in terms of earning potential. Worse yet, these well-connected and deep-pocketed financial interests’ prodigiousness with student loans is precisely what has made higher education less affordable, since tuition has steadily risen in response to the “easy money” doled out for student loans.

One week away from early voting (at least in New York), I can understand how President Biden would want to appear to be dispensing relief to hundreds of thousands of voters. That said, generosity with other people’s money is impossible. Hopefully voters see through the illusion and stop rewarding those interests which exploit our students’ high hopes and dreams.