After the Biden administration announced its ham-fisted scheme to eliminate $10,000 in student loans for borrowers making less than $125,000 per year, and $20,000 for Pell grant recipients, the Washington Post and the Wall Street Journal editorial boards independently wrote about what a stupid idea it is.
“This is easily the worst domestic decision of his Presidency and makes chumps of Congress and every American who repaid loans or didn’t go to college,” writes the Journal editorial board.
Democrats said these plans would reduce defaults. They haven’t. Federal student debt has ballooned because many borrowers don’t make enough to cover interest and principal payments, so their balances expand. Student debt has nearly doubled since 2011 to $1.6 trillion, though the number of borrowers has increased by only 18%.
Now Mr. Biden is cutting undergrad payments to a mere 5% of discretionary income. The government will also cover unpaid monthly interest for borrowers so their balances won’t grow even if they aren’t paying a penny. This will mask the cost to taxpayers of the Administration’s rolling loan write-off. Student-loan debt won’t appear to swell even as it does. What a fabulous accounting trick. -WSJ
