Joe Biden's Repulsive Loan "Forgiveness"

There has been a good deal written about the President’s plan to have the taxpayers pick up the bill for $10,000 of student loans for individuals making less than $125,000 or households making twice that. The plan also adds goodies for Pell grant holders, and extends yet again the time for repayment of student loans (a “final” extension, we are told, I assume facetiously).

Much of the commentary has been about features I consider quite important but, overall, secondary. Whether the President can pull off this huge fiscal enterprise by a stroke of his pen, and without Congressional approval, raises significant constitutional questions, but I don’t think that’s the main problem. The inflationary effect of still more gargantuan government spending and giveaways without the corresponding production of goods and services is also appalling, but that’s not the main problem either. Nor is the fact that Biden’s plan is “regressive,” redistributing wealth from the those who on average earn less to those who on average earn more — something even the New York Times noticed:

Fewer than 40 percent of Americans graduate from a four-year college, and these college graduates fare far better than nongraduates on a wide range of measures. College graduates earn much more on average; are less likely to endure unemployment; are more likely to marry; are healthier; live longer; and express greater satisfaction with their lives. These gaps have generally grown in recent decades.

As a result, many economists have expressed skepticism about the idea of universal student-loan forgiveness. It resembles a tax cut that flows mostly to the affluent: Americans who attend and graduate college tend to come from the top half of the income distribution and tend to remain there later in life. College graduates are also disproportionately white and Asian {My note: it’s the Times, so you knew that was coming].

“Education debt,” as Sandy Baum and Victoria Lee have written for the Urban Institute, “is disproportionately concentrated among the well-off.”

Although all those features are bad enough standing on their own, and have garnered the lion’s share of attention, the most perverted feature of Biden’s plan is hiding in plain sight: It lowers moral standards yet again, punishing virtue while rewarding indiscipline, and creating the worst kind of incentives.

Any society that values honesty and wants to preserve the trust needed for a wholesome commercial and civic life knows this: If you borrow money promising to pay it back, keep your promise and pay it back.

This is not real hard. I knew it by the time I was 10 because my parents made sure I knew it.

Yes, there may be emergencies the borrower could not have foreseen that call for a degree of mitigation. That’s why we have bankruptcy law. But unless we’re prepared to abandon basic honesty wholesale, paying back what you owe must be the governing rule in all but the most extreme cases. For the government, of all things, to blow a hole in that rule is worse than perverted.

The President has turned honest people into chumps and grifters into winners. Mitch McConnell put it well:

Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt.

And of course there’s this too: Why all the borrowing to begin with? Has the concept of saving for what you want vanished completely? When I was growing up in the Puritan days of JFK, parents saved for their childrens’ college education, knowing that you can’t expect a teenager to foot college expenses. But children can bear some of the responsibility too, for example, by saving from summer jobs or taking a part-time job while in college. It’s a sign of how far things have gone downhill that so many Americans seem to think saving is for suckers and take for granted that the eternal credit card is the way to live. And while that’s sorry enough on its own — and alarming, and unsustainable — expecting, or even in my view accepting, a bailout for your carefree ways is even worse.

In light of Biden’s program, who in his right mind would work and save when gambling on a government bailout just became the smart move?

I don’t pretend to be an expert on this new program, and perhaps commenters with better digestion than I will have the gumption to examine this moral and fiscal train wreck in more detail, and will be able to add insights I’ve missed. I’ll add just one last note. Although this is being called loan “forgiveness,” it is no such thing. The loans aren’t just vanishing. Instead, billions of dollars of them will now be paid off — only by people who didn’t ask for them or benefit from them, in order to pave an easier path for the now-chipper crowd who did both.