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Chuck Grassley and Rob Portman: Biden’s student loan debt transfer is an abuse of executive power



Last week, President Joe Biden, without authorization from Congress, announced he plans to transfer roughly $500 billion worth of student loan debt from the borrowers who took out the loans to hardworking taxpayers across the country. Other presidents, Republicans and Democrats, have attempted to overstep their authority, and we have never been shy about criticizing them. But in our time in the Senate, we have never seen a president attempt to spend up to a trillion dollars with the stroke of a pen.

To be clear, Biden does not have the authority to cancel billions in student loan debts without congressional authorization. House Speaker Nancy Pelosi (D-CA) agreed that the authority is not there when she explained that “people think that the president of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay but he does not have that power. That would have to be an act of Congress.” The Department of Education issued a memo in January 2021 agreeing with the speaker that the president does not have the authority to cancel student loan debt.

Yet Biden claims he has this authority under the HEROES Act, a 2003 law to help those serving their country in Iraq and Afghanistan. This post-9/11 bill gave the secretary of education the power to grant flexibility to service members with loans in times of war or national emergency. Now, the White House argues that this targeted law, which was clearly intended to help a select group of service members, gives Biden the ability to transfer debt from tens of millions of civilian borrowers to taxpayers as a result of the COVID-19 “national emergency.”

The White House’s inconsistent messaging related to the pandemic varies based on what is politically convenient. They recently argued that COVID-19 policies need to be rolled back. Earlier this year, for example, the administration attempted to end Title 42 , a public health order that gives the government an increased ability to turn away migrants at the border. When it came to immigration policies the administration dislikes, “current public health conditions and an increased availability of tools to fight COVID-19” mean that pandemic measures are “no longer necessary.” But now, just months later, the pandemic conditions are suddenly so dire that billions of dollars in debt must be canceled.

In our system of checks and balances, this major decision regarding loan forgiveness must be made through the legislative process, not the stroke of a pen at the White House. It’s often said that Congress doesn’t hide elephants in mouse holes. Estimates of the cost of this program range from $500 billion to $1 trillion. For days, the White House refused to release an estimate, claiming they didn’t even know how much this would cost taxpayers. Numbers that large can be hard to put in context, but that is the equivalent of six to 13 times the entire discretionary budget Congress appropriated for the Department of Education earlier this year.

The bulk of that Education Department budget is aimed at those who need help most: low-income families. This debt transfer does the opposite. A college education is an investment, and students who took out loans to pay for their educations typically make their investment back manyfold. For an average loan of $30,000, a bachelor’s degree is worth about $2.8 million over the course of a lifetime.

For the same amount it will cost taxpayers in borrowed money to pay off the debts of those who already got a college education, including well-off graduate degree holders, Congress could have doubled the Pell Grant for a decade to help those most in need access a college education. To be sure, there are some borrowers who have difficulty making payments. That’s why Congress has already created a number of programs to help, such as income-driven repayment plans. These are especially beneficial for borrowers with low incomes, as some borrowers see no monthly payment at all.

But make no mistake: Nothing is getting “canceled.” These dollars have already gone out the door to pay for college educations; now, it’s just a matter of who will pay those dollars back. Typically, that responsibility is up to the borrower. If Biden’s action is allowed to proceed, it will instead be all taxpayers, two-thirds of whom don’t have a bachelor’s degree, who will foot the bill for other people’s debt.

Taxpayers will pay for this action, both by paying down debt and through increased inflation. Biden’s debt transfer will raise expectations of debt forgiveness, encouraging borrowers to take out more loans and giving colleges the green light to raise tuition even more. All of this is inflationary.

Prominent liberal economists agree that this uptick in spending will contribute to higher inflation. Jason Furman, a former economic adviser to President Barack Obama, has warned that everyone will pay for this debt transfer, either in the form of higher inflation, higher taxes, or lower benefits in the future. Former Clinton administration Treasury Secretary Larry Summers, who was one of the first to argue that Biden’s big 2020 spending bill would lead to today’s high inflation, is again saying that “student loan debt relief is spending that raises demand and increases inflation.” It seems the White House is willingly repeating mistakes of the past.

Instead, if we want to be serious about reducing the cost of college rather than moving debt around after the fact, we need to make sure that students know upfront how much they are actually likely to pay. That’s why Republicans have introduced a trio of bipartisan bills to ensure that students can easily see estimates of the total cost of their degree, what scholarships they will receive, and what their expected income will look like after they graduate.

Biden’s student loan debt transfer is an unprecedented abuse of executive authority, an insult to hardworking people who paid off their debt or chose not to take it on at all, and a ticking time bomb that will make the economic hardships many are already experiencing that much worse. All of this is avoidable, and it’s yet another example of how the Biden administration is ignoring the needs of working class Americans.

Chuck Grassley represents the state of Iowa in the U.S. Senate. He is the former chairman and current member of the Finance Committee. Rob Portman represents the state of Ohio in the U.S. Senate. He serves as ranking member of the Homeland Security and Government Affairs Committee and as a member of the Finance Committee. 


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Posted: September 8, 2022 Thursday 06:00 AM