Congress Should Reject President Biden’s Student Loan Bailout | Citizens Against Government Waste

Congress Should Reject President Biden’s Student Loan Bailout

The WasteWatcher

While the Supreme Court is currently considering whether President Joe Biden’s student loan forgiveness plan is constitutional and will issue its decision in June, Congress has an opportunity to ensure that the legislative branch rejects the plan.  Under the Congressional Review Act (CRA), Congress possesses the authority to rescind certain executive branch actions.  H. J. Res. 45, which was introduced on March 27, 2023, and will be voted on by the House on May 24, 2023, would use the CRA to overturn the student loan forgiveness plan.

President Biden announced his plan to forgive student loan debt for certain borrowers on August 22, 2022.  Under the proposal, borrowers earning under $125,000 can apply for up to $10,000 in federal student loan relief.  Pell Grant recipients would also be eligible to receive up to $20,000 in loan forgiveness.  If allowed to proceed, the President’s student loan plan would cost taxpayers an estimated $250 to $350 billion, but as the Council for Citizens Against Government Waste noted in a May 23, 2023, letter to the House of Representatives, forgiving all federal student loans could cost $1.7 trillion. 

The announcement that the Biden Administration would be forgiving federal student loan debt for select borrowers came after years of pressure from progressive members of Congress to eliminate large amounts of student loans, or all student loans.  In September 2020, Senate Majority Leader Chuck Schumer (D-N.Y.) joined forces with Sen. Elizabeth Warren (D-Mass.) to call for a presidential proclamation to forgive $50,000 for all borrowers.  Similarly, in an interview published in The New Yorker on February 14, 2022, Rep. Alexandria Ocasio-Cortez (D-N.Y.) criticized President Biden for failing to take action on student loans up to that point in his presidency.  The President’s failure to cancel loans, she maintained, “has demoralized a very critical voting bloc.”

Shifting the cost of student loans from borrowers to taxpayers without loans is not only unfair to taxpayers who have never held any federal student loans or who have paid off their loans on their own, but also regressive.  Wealthier Americans owe far more money than poorer Americans on their student loan debts, and will disproportionately benefit from the President’s program.  Moreover, as noted in Forbes, those with the highest amounts of debt are likely to have a greater income later in life because the largest amounts of debt tend to be accrued from graduate degrees with lead to larger incomes.  The loan forgiveness program, then, becomes a handout to the rich.

Congress should make it clear that the legislative branch disapproves the Biden Administration’s unilateral action to forgive federal student loans by approving H. J. Res. 45.