This supposed ‘solution’ pours fuel on the fire, encouraging universities to charge higher tuition and students to take out more in loans.
This supposed ‘solution’ pours fuel on the fire, encouraging universities to charge higher tuition and students to take out more in loans.
NRPLUS MEMBER ARTICLE {L} ate last month, President Biden and his Department of Education announced the launch of the “SAVE” Plan, a reform that expands existing income-driven repayment (IDR) programs to the tune of up to $550 billion. Now, it’s been reported that as many as 4 million borrowers have signed up for the plan, many of them enrolled automatically.
Last week, Senator Bill Cassidy (R., La.), ranking member for the Senate Health, Education, Labor, and Pensions (HELP) Committee, along with Senators John Thune (R, S.D.), and John Cornyn (R., Texas), introduced a Congressional Review Act resolution to overturn President Biden’s new IDR rule.
As Beth has written before, we should have programs in place that protect borrowers from facing unaffordable student-loan payments in times of depressed earnings, even granting forgiveness for long-standing unaffordable debts. We don’t want people to spend their lifetime under the weight of exorbitant student debt.
What Biden is doing, however, would undermine the purpose of these programs as a safety net for borrowers truly in need, turning the system into a de facto grant program that disproportionately benefits a set of already-privileged Americans. This goes without mentioning that this supposed “solution” to the real issues facing our higher-education system pours fuel on the fire, encouraging universities to charge higher tuition and students to take out more in loans.
Even if this plan is grounded in good intentions, a clear-minded assessment of its immediate and long-term impacts renders it a disaster for borrowers and a short-sighted political calculation on Biden’s part. If this plan takes full effect, institutions of higher learning will have more incentive to charge higher tuition — if mass amounts of student debt are simply going to be forgiven, why wouldn’t they charge more? — and students will have less reason to make sure that the program they choose to enroll in is “worth it” financially.
Reducing aggregate student debt and making college more affordable are admirable goals that most Americans share, but they cannot be achieved until colleges and universities are held accountable for the value of their diplomas and Democrats work with Republicans in Congress to streamline our Kafkaesque labyrinth of repayment programs.
Despite progressive claims to the contrary, substantive reform can be accomplished through the deliberative, input-based congressional process. As Republicans in both the House and Senate step up to propose meaningful reforms, this has never been clearer. Biden and congressional Democrats now have the opportunity to work with Republicans to increase transparency when students are shopping for college, streamline and simplify our IDR programs, and establish a smooth path to repayment for borrowers.
Reform that makes its way through and out of the legislative process promises to be not only more comprehensive, but more lasting, than anything that can be summoned into existence by executive whim. It also stands a much better chance of surviving judicial scrutiny.
Biden and his Democratic allies ought to abandon their attempts to strong-arm the student-loan program out of existence, and instead engage the legislative process to produce real, lasting solutions for Americans.
Beth Akers is a senior fellow at the American Enterprise Institute. Joe Pitts is a research assistant at the American Enterprise Institute.