RUTHFULLY YOURS

Every day it gets harder to keep up with the accelerating lawlessness of the Biden Administration. The basic strategy is, just do whatever the left wants, using all the vast powers and resources of the federal government, and dare anyone to try to stop you. To mention just a few recent examples, one day it’s a multi-trillion-dollar transformation of the energy economy without Congressional authorization (perhaps slowed down by the Supreme Court’s decision in West Virginia v. EPA); the next day it’s holding meetings to pressure tech giants like Twitter and Facebook to censor the speech of political opponents; next it’s weaponizing the Justice Department and FBI to investigate and prosecute the leading political adversary on the flimsiest of pretexts. Additional examples could fill tomes.

But now we have what could well be the most audacious lawless act yet. I’m talking about the plan to “cancel” some hundreds of billions of dollars of student loans, announced by President Biden on Wednesday August 24.

With this one, they’re barely pretending to have a legal basis. Supposedly, according to the Department of Education’s legal memo, it’s the 2001 HEROES Act, 20 USC Section 1098bb(a)(1) and (2)(A), passed in the immediate aftermath of 9/11, giving the Secretary of Education authority to “waive or modify” provisions of student financial assistance programs at times of “national emergency”; combined with the current Covid-19 “national emergency,” just extended by Biden past the upcoming election. Does this fool anyone? It’s the most naked possible vote buying, in the run-up to the mid-terms. The cynical political calculation is that the Democratic Party base of upscale young college grads will show their gratitude for the $10,000 or $20,000 handouts with their votes, while the blue collar workers who never took out student loans will not perceive how they are getting hosed. Meanwhile, the Supreme Court will likely strike this down under the Major Questions Doctrine when the issue finally gets there, but by that time this election (and probably the next one) will be long over. Maybe a Democratic Congress can even pack the Court by then.

Meanwhile, even as a few hundred billion dollars of student loans are about to get canceled, there is no slowdown in issuance of new loans. According to the latest data from the Federal Reserve Bank of St. Louis, the amount of outstanding federal student loans at the end of Q2 2022 (June 30) was $1.748 trillion. Here is the Fed’s chart showing how the volume of those loans has mushroomed by almost a factor of four from only $480 billion in 2006:

So are we doomed to have this nearly $2 trillion pool of outstanding loans function as a slush fund for the Democrats, whenever they hold the presidency, to pass out to their base a few months prior to every upcoming election for the infinite future? The situation is now badly out of control; but are there any ways that rational control can ever be re-asserted?

Here are a couple of ideas that have been tossed out by others, and then one of my own:

• Robby Soave, in an August 24 article at Reason, says that the student loan program needs to be fundamentally restructured if not abolished. Indeed, he cites President Biden’s own words against him: “An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree,” said Biden. “The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided.” This is quite an indictment of the federal student loan program, so one might have expected that Biden’s generous debt forgiveness plan would be accompanied by serious reforms to the underlying system that produced such inequities. After all, the government is conceding that its loan program has scammed millions of desperate people. Their situation is so dire, their prospects of repayment so dim, that Biden is requiring everyone else to pitch in and help them. But no, Biden’s debt forgiveness plan will do nothing—absolutely nothing—to fundamentally change the incentive system that created the doom spiral in the first place.

Unfortunately, such a fundamental restructuring would take Congressional action, which the Democrats will vehemently oppose. They are only too happy to have an ever-growing slush fund to pass out at convenient pre-election times.

• Another intriguing proposal would charge the loan of a defaulting student borrower, or at least a portion of it, back to the school that the student attended. A form of this proposal has been floated multiple times by Glenn Reynolds of Instapundit. Also, according to this piece in Forbes in July 2019, Senator Josh Hawley of Missouri proposed legislation along these lines at that time: “Hawley’s legislation will require colleges and universities to repay 50% of the balance for any defaulted student loans that students borrowed to attend their institution. . . . ‘It’s time to break up the higher education monopoly,’ Hawley said.”

But Hawley’s proposal didn’t go anywhere at the time. Also, while the proposal has much to recommend it, it also somewhat misses what ought to be the main targets of reform. For example, one of the most galling aspects of the Biden loan forgiveness is the large amounts of handouts that will go to graduates of prestigious universities, who have high earning prospects and are also the most loyal supporters of the Democrats. But the graduates of those prestigious institutions likely have low default rates on their loans, and therefore the institutions will see little financial repercussion from Hawley’s proposal, even if enacted. Instead, the burden of Hawley’s proposal would fall on less prestigious colleges and even trade schools.

So what might we come up with as a proposal that could be implemented without any new legislation and that would hit hardest the targets most in need of discipline? How about this:

• The next Republican administration announces that institutions found in systematic violation of federal law will be disqualified from having their students participate in the student loan program until the violations of law are corrected. The most obvious example of systematic violation of federal law would be blatant discrimination on the basis of race, although there could be other examples. Investigations would promptly be launched against schools thought to be engaged in systematic racial discrimination (in most cases they brag about it), perhaps accompanied by periodic leaks to friendly press outlets about facts being uncovered.

I couldn’t wait to hear the howls of protest.