Biden Student Loan Cancellation Policy is Unforgivable

Just in time for the back-to-school season, the Biden administration announced a new student loan cancellation policy that is ill-conceived and purposefully designed to circumvent the increasing majority opposition to full student loan forgiveness.

Biden’s education bailout comes at a time when a growing segment of the public is questioning the value of higher education, and it’s no wonder. The excesses of skyrocketing tuition, coupled with a myriad of degrees that have little value in the workforce, are exhausting family finances and leading many students to fumble their futures. College graduates now suffer a 43% underemployment rate while carrying, on average, $55,000 of student loan debt.

This problem needs to be fixed, not rewarded through a massive government bailout. Just as a coalition of centrist Democrats and moderate Republicans are collaborating to rein in the high levels of unchecked spending, Biden’s announcement disregards taxpayer distaste for massive government giveaways, especially hefty wealth transfers to the affluent.

Not to be obstructed, the administration found a back door with the Education Department’s announcement that it will operate under the assumption that borrowers were defrauded when determining if they should be granted full student loan relief. The announcement changes the current policy known as borrower defense to loan repayment (BDR) or “borrower defense.” It is a type of debt appeal offered to recipients of direct federal student loans who attended a school they believe misled them, engaged in other misconduct, or violated state law. 

Up until the Education Department’s announcement this week, students who were genuinely defrauded rightly qualified for compensation and were required to complete a 30-minute application. Now, students, many of whom suffered no harm and have no evidence of misrepresentation, are assumed to be aggrieved with no requirement of evidence. 

BDR has been little studied or understood, and the Biden Administration is manipulating the borrower defense rule as a backdoor to provide universal student loan relief. In July, the DOE approved 1,800 BDR claims bringing the Biden Administration’s total to nearly 92,000 borrowers with a valuation of over $1.5 billion. Calls by Senator Warren and others for universal student loan relief were met with significant consumer backlash. While student borrowers would welcome the relief, countless other American taxpayers paid their loans or passed on a college education and don’t want to be forced to shoulder the cost of other peoples’ financial decisions. 

House Education Committee Ranking Member Virginia Foxx supported the prior rule as one that “balanced fairness for student borrowers with fairness for taxpayers.” By reversing the application process, the process now “opens the system to potential fraud and abuse at the expense of taxpayers,” Foxx warned. 

The potential for abuse of the new policy is elevated when you consider students also drove up their tab borrowing for living expenses like housing, meals, and transportation. Should these expenses be considered fraudulent now as well?  How does the education department define fraud now? Should students that paid their expenses back over time also get reimbursed? This passes all the tests of bad policy, raising more questions than it answers while promising lax rules sure to soak taxpayers and further drain our treasury

The fact is, the United States is among the most generous countries in the world in offering people a path to earn a college degree, with the federal government spending $30 billion on Pell Grants in 2020. Our meritocracy provides more educational opportunities for people of every economic class. Is it too much to require that students offer at least a modicum of evidence in asserting their claims, just as everyone else is obligated to do in a fraud claim?

This deliberately permissive debt cancellation scheme is a slap both to those dutifully striving to pay back their loans as well as the 80% of adult Americans who don’t carry student loan debt. With diving poll numbers, we get that Biden must keep the Bernie Sanders wing of his party happy, but a backdoor giveaway that penalizes taxpayers and responsible borrowers is simply unforgivable.