Biden Student Loan Proposal Ignores the Root Problems of the Debt Crisis

National Association of Scholars

The Biden administration is days away from making one of the most anticipated decisions in his presidency on broad student loan forgiveness. The administration has already forgiven over $30 billion in student loans through borrower defense, disability discharges, and the Public Service Loan Forgiveness (PSLF) program. These actions are unfair to American taxpayers and economically harmful, especially in the context of rapid inflation. Instead of addressing the root problems of the student debt crisis, the Biden administration continues to add fuel to the fire.

Heritage Foundation experts Lindsey Burke and Adam Kissel wrote a scathing critique of recently proposed Department of Education (ED) regulatory changes. The ED’s changes would loosen requirements for existing loan forgiveness programs and implement onerous restrictions on college marketing practices. We agree with the Heritage Foundation’s comments on the ED’s proposals: not only are these policies useless for addressing the causes of the student debt crisis, but they will also exacerbate inflation and reduce competition in the higher education market.

For instance, the ED would like to streamline the process for those with disabilities to discharge their debts. The ED, however, fails to properly weigh the benefits and costs of loosening restrictions on access to debt forgiveness. As Adam Kissel writes: “Disability fraud is rampant. Under the proposed rule, low-level medical professionals could declare whether someone is completely and permanently disabled, and the requirement for documentation in later years would be entirely removed.”

The ED also wishes to accelerate the process by which government workers receive loan forgiveness by counting deferment and forbearance periods as “payments.” This will expand loan forgiveness under the PSLF program, an unfair program that advantages public sector workers at the expense of private sector workers. Government workers already receive generous compensation and benefits, along with increased job security. Loan forgiveness is an arbitrary subsidization of the public sector based on outdated notions of the nature of government work.

The ED also has proposed several regulations that target for-profit colleges, which it believes have greatly contributed to the student debt crisis by deceiving impressionable students into enrolling through “aggressive” marketing tactics and, in some cases, outright fraud. While for-profit colleges do have higher default rates and their alumni owe a disproportionate amount of student debt, these institutions should not be held to a different standard from other universities or from other industries. The ED’s proposed regulations on marketing and recruitment are unnecessary additions to existing consumer protection laws. Their expansion of the legal definition of a “school/institution” to include owners in order to hold them financially liable in borrower defense claims is at odds with norms of corporate law. As the Heritage Foundation writes, “Expanding the definition simply to make it easier to claw back funds from those parties, whether they are reasonably culpable or not, would be arbitrary and capricious.”

Should the ED want to address issues of rising tuition, high default rates at for-profit universities, or instances of fraud, the answer isn’t to expand debt forgiveness or to alter legal definitions to increase their regulatory power. The ED should rather recognize that the dysfunctional nature of the higher education sector is due almost entirely to excessive government subsidization and employment regulations. Solutions to the student debt crisis will come only from addressing these issues first.


Image: Karolina Grabowska, Public Domain

  • Share

Most Commented

September 6, 2024

1.

Professor Alleges "Widespread" Discriminatory Hiring Coverup at University of Washington

Audio acquired by the National Association of Scholars describes allegations of coverup race-based hiring coverup at the University of Washington...

October 29, 2024

2.

The Looming Irrelevance of Middle East Study Centers

Today’s Middle Eastern Studies Centers are facing a crisis due to the winds of change in the Middle East and their own ideological echo chamber....

September 25, 2024

3.

NAS Statement on University of Pennsylvania Sanction of Amy Wax

The National Association of Scholars is outraged—but not surprised—by Penn's decision to penalize Wax for exercising her academic freedom. ...

Most Read

May 15, 2015

1.

Where Did We Get the Idea That Only White People Can Be Racist?

A look at the double standard that has arisen regarding racism, illustrated recently by the reaction to a black professor's biased comments on Twitter....

October 12, 2010

2.

Ask a Scholar: What is the True Definition of Latino?

What does it mean to be Latino? Are only Latin American people Latino, or does the term apply to anyone whose language derived from Latin?...

September 21, 2010

3.

Ask a Scholar: What Does YHWH Elohim Mean?

A reader asks, "If Elohim refers to multiple 'gods,' then Yhwh Elohim really means Lord of Gods...the one of many, right?" A Hebrew expert answers....