By John Ubaldi, “Ubaldi Reports”

In order to secure his progressive base for the midterm elections, President Biden in one bold announcement, announced an executive order canceling $10,000 in student loan per borrower ($20,000 for Pell Grant borrowers), and to limit those with annual incomes of less than $125,000.

This may secure a campaign promise where Biden stated when elected president he would forgive $10,000 of student loan debt, his progressive base really wanted him to be much bolder by forgiving upwards of $50,000.

This act by the president set off a tsunami of anger, as those who paid off there student loans, or worked putting themselves through college, or those families who sacrificed everything to send their children to college. What about those who incurred debt by attending a trade school as there debt will not be forgiven, this will only further amplify the argument the Democrats don’t care about working class non-college educated Americans.

What about veterans who had to go into the military and serve in combat to qualify for the GI Bill to attend college, are these individuals’ suckers as they feel the strong stain of anger as the decision by Biden, means they now have to pay for someone else’s college debt.

The question which needs to be asked does Biden have the authority under the constitution to unilaterally cancel student loan debt, when this is in the prevue of the Congress, where it states, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

This is precisely what is stated in Section I Article 9 of the U.S. Constitution.

Even Democratic House Speaker Nancy Pelosi stated last year at a July 28th 2021, press conference that President Joe Biden does not have the executive authority to issue “debt forgiveness,” further commenting that any such action would be illegal in our constitutional system as this would “to be an act of Congress.”

Pelosi further extolled everyone that the “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 has to be an act of Congress.”

Given this backdrop the president moved forward anyway, and Speaker Pelosi ignored her past comments from a year ago and fully embraced Biden’s decision further acquiesced Congress’s legislative authority to the executive branch.

The father of the U.S. constitution James Madison would be rolling over in his grave as members of Congress cede their authority to the executive branch as Madison believed in the power of each branch of the government to hold on to their authority not allow another branch to usurp that power.

As Biden moves forward with his executive order on student debt relief the question remains is how much will this cost and who will pay for it? The Biden administration has given vague details on the cost, but on Friday he did give a bit more of cost estimate of around $240 billion over the next ten years.

This conflicts with the Penn Warton School of Business at the University of Pennsylvania which estimates the true cost anywhere between $500 billion to $1 trillion depending on how potential cost estimates are calculated and behavioral changes are factored in.

This contends with what has been reported by The Committee for a Responsible Federal Budget analyzed that Biden’s student loan forgiveness would cost around $500 billion not the $240 billion the president has stipulated.

Even before the president’s announcement outside experts calculated this as a wealth transfer, a paper written by the University of Chicago’s Becker Friedman Institute for Economics shows that erasing all student loan debt as many progressive’s originally wanted would distribute $192 billion to the top 20% of earners in the U.S., but just $29 billion to the bottom 20% of U.S. households.

Even the liberal leaning Brookings Institute reported in 2020 that data from the Federal Reserve’s Survey of Consumer Finances in which “The highest-income 40% of households (those with incomes above $74,000) owe almost 60% of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40% of households holds just under 20 percent of the outstanding debt and making only 10% of the payments.”

Missing from the entire debate and neither the Biden nor any Democrats have been asked is why should we trust you to fix the student debt loan problem when you created the mess in the first place?

What has not been reported is that the student loan debt was a problem in 2010, but the Democrats led by President Obama and Vice President Biden decided to nationalize the student loan program instead of having it administrated by financial institutions.  In 2010, Obama and the Democratic Party made it dramatically worse, with the passage of the Health Care and Education Reconciliation Act; a little-known rider was added called the Student Aid and Fiscal Responsibility Act, which fundamentally changed the way student loans were granted.

A rider is an additional provision that is added to a bill or other measure under consideration by the Congress that has nothing to do with the subject matter of the main bill, in this case this rider was attached to Obamacare.

The healthcare reform bill was passed and signed into law by President Obama on a stickily partisan vote with not one Republican voting in favor. Like healthcare the Student Aid and Fiscal Responsibility Act had an extreme adverse effect instead of making college and university less expensive it exploded the cost, and with it student loan debt quadrupled tenfold.

Prior to the passage of this game changing legislation signed into law by President Obama, student loans were issued as guaranteed loans, with the banks as the loan agent and the terms determined by the federal government. After its passage the federal government assumed all responsibilities for student loans and the banks were eliminated from the entire process.

Unfortunately this had the opposite effect as college and universities raised the cost of tuition fully knowing students wanted a college education, with the federal government backing all student loans. The act did nothing to rein in college spending instead the non-academic side of higher education namely the administrative bureaucracy exploded far faster than any other cost.

Biden has done nothing to address the root cause of higher college costs he just directed the financial burden to the U.S. taxpayer, and the many who paid off their student loan or never attended college.

How fair is this?

 

John Ubaldi is Owner/President of Ubaldi Reports, a retired 30 year Marine Corps combat veteran of both Iraq and Afghanistan, holder of a bachelor degree in government and a Master’s degree in national security studies, has had articles published in military publications on national security issues.