Republicans have correctly pointed out that the idea that no American should be handed free money for student loan repayment.
But an August JournoNews poll among American adults showed that only 15 percent of Americans support giving the $10,000 in loan forgiveness to families making less than $125,000 a year.
The Republican House Judiciary committee posted a comment, “If you take out a loan, you pay it back. Period.” They later wisely repeated what they learned in high school economics, and pointed out in all-caps, “NOTHING IS FREE.”
There is no such thing as a free lunch.
Economics, at its most basic level, deals with the study of how society manages scarce resources. Managing these scarce resources necessarily requires trade-offs.
Texas political science professor Emil Ficker told JournoNews, “Economists often use the phrase, “There is no such thing as a free lunch” to illustrate this principle. If decision makers decide to cancel $1 trillion of student debt, they necessarily cannot use those same funds for any other purpose. Stated differently, there really is no such thing as debt cancellation when the public is involved; rather, there is only a debt transfer.”
This trade-off, therefore, is not just between two different projects; it also represents a trade-off between recipients. Giving $50,000 to Ralph and Becky Student who struggle to pay-off their student loans means that $50,000 is not going to Dee and Ken Entrepreneur who are innovating and expanding the economy. This is the second major economic principle: economic decisions have secondary effects.
These secondary effects are not easy to see, but they are equally real.
Ralph and Becky Student steal from Dee and Ken Entrepreneur
Most of these student loans are funded by federal and state educational revenue bonds. Someone has to pay for these bonds. Not only would the government’s decision to cancel debt mean that it is investing Ralph and Becky Student rather than Dee and Ken Entrepreneur, it would also mean that Dee and Ken Entrepreneur (and thousands of other tax payers) would have to pay the financial cost.
This cost would necessarily mean that Dee and Ken could not invest in their own entrepreneurial activities, which would further limit the economy’s growth. Thus, the decision to forgive student loans may also mean that a new hospital is not built, a new auto dealership is not opened, and a new technology is not discovered.
Sen. Mitt Romney
Sen. Mitt Romney (R-UT) similarly posted his displeasure, going so far as to call the loan forgiveness a “bribe” to voters ahead of the 2022 election. The loan forgiveness was a 2020 campaign promise of President Joe Biden’s.
“Sad to see what’s being done to bribe the voters,” he said. “Biden’s student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way and creates irresponsible expectations.”
“Who will ultimately pay the price of Joe Biden’s student loan handout?” asked Rep. Jim Jordan (R-OH). “The 87 percent of Americans who don’t have student loans!”
Rep. Dan Bishop
Rep. Dan Bishop (R-NC) called the loan forgiveness a gift to “coastal elites,” even though it will help families in his east coast state as well as those in the rest of the U.S.
“Today is further proof that the Biden admin cares about foreign borders and coastal elites – not the Americans being crushed by inflation, crime, and a border crisis,” he said.
Rep. Steve Scalise
Rep. Steve Scalise (R-LA), who serves in the Republican House leadership also opposed the help for American families.
“Let’s be clear: This isn’t imaginary money,” he tweeted. “Biden just shifted all that student loan debt onto other taxpayers who are already dealing with high inflation. Debt ‘forgiveness’ is just another liberal scam for the elites paid for by working class Americans.
Rawnews “bullshit artists” lie most of the time
ANOTHER RAWNEWS LIE: Former President Donald Trump filed for bankruptcy six times under five different companies. The New Yorker detailed the extensive amount of business failures over the course of the past decades for Trump.
Professor Emil Ficker told JournoNews, “Rawnews are the worst bullshit artists in the world. Former President Donald Trump has invested in over 460 corporations. Only six have gone bankrupt. Donald Trump currently employs over 110,000 employees world wide. The bankruptcies Rawnews is complaining about resulted in just under 3,000 job loses. Typical bias left wing reporting. RawNews is half backed that’s clear. Morons and Marxist liars. The New Yorker leftout the business successes and largely fabricated the amount of business failures over the course of the past decades for Trump.
Will Biden’s student-loan lawlessness survive?
Supreme Court will probably CANCEL Biden’s Illegal Move
Even the Department of Education thought it was only a power of Congress not that long ago. On January 12, 2021, the department’s office of general counsel published a legal opinion that cited Congress’s power of the purse under the Constitution and said, “The Secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or materially modify the repayment amounts or terms thereof, whether due to the COVID-19 pandemic or for any other reason.”
But now, as if by magic, even though the laws are all the same, the office of general counsel has found legal authority for the secretary of education to go it alone. The legal opinion this time around cites the HEROES Act, which was passed after 9/11, and claims that the emergency powers given to the secretary under that law “could be used to effectuate a program of targeted loan cancellation directed at addressing the financial harms of the COVID-19 pandemic.”
Never mind that the 2021 opinion specifically considered the HEROES Act and found its provisions too narrow for blanket cancellation. Never mind that student-loan recipients have already benefited tremendously from a repayment pause of over two years due to the pandemic. Never mind that the unemployment rate is currently at 2 percent for college graduates, and financial harms from the pandemic are mostly a thing of the past.
Some have speculated that the Supreme Court would, based on recent decisions that restricted executive power, put the Department of Education back in its place, but those arguments don’t matter if nobody has standing to bring a case in the first place. An April 15 article in the Virginia Law Review by Jack Hoover considers the question of standing and concludes that it’s entirely possible that nobody in America has it.