"Student Loan Forgiveness" Is Vote-Buying Welfare

The new rule is that you can take out a loan for whatever you want and make everyone else pay for it. It sounds selfish, irresponsible, and thoughtless, but not if you call it <fingers> student loan forgiveness </fingers>. It’s like putting a halo on a turd.

Glorified welfare queens of the academic variety complain that it’s cruel to make them pay for loans they voluntarily agreed to assume — loans made unbelievably more expensive by the very political party for whom they consistently vote. Congress’s takeover of the student loan industry, via the Health Care and Education Reconciliation Act of 2010, skyrocketed college costs. From Forbes:

Although politics were the driving force behind the passage of HCERA, the $62 billion it promised in savings was not really questioned, since that figure came from the nonpartisan Congressional Budget Office. But the validity of the enormous savings and the risk attendant with the direct lending warrant further scrutiny.

The analysis is fairly simple and the flaws obvious. The first incorrect assumption was that, if HCERA had not been passed, private lenders would have financed new FFEL [Federal Family Education Loan Program] loans with private capital. If true, this would have required the government to pay private lenders subsidies amounting to $22 billion over the next 10 years. However, it simply wasn't going to happen. With more than 60% subsidy cuts in 2007 and volatility in the capital markets, private lenders were not going to risk financing FFEL loans at a loss. Even if this assumption had been true, the $22 billion in savings was not incremental as the government had been effectively financing all new FFEL loans since 2008.

The second and most controversial assumption was that the loans from 4,000 colleges forced to switch from private lenders to the government program would generate $40 billion in additional interest income over the next 10 years. This calculation assumes that the large net interest margin earned on student loans today decreases only modestly, as Treasury borrowing rates rise to reflect the present yield curve. The problem with this reasoning is that the interest rate on student loans is fixed for 10 years, while the government's borrowing cost is variable. If Treasury rates rise to levels above the present yield curve, which seems very likely, then the $40 billion estimate is too high.

HCERA marks the end of perhaps the most successful public/private partnership, which had provided low-cost funding for the college education of our nation's children.

Democrats eliminated the competition between loan providers with a swampy direct loan program, establishing government as the sole steward and originator of college loans. When Democrats stage-complain about the high cost of education they are literally complaining about their own votes to consolidate total control of student loans at the federal level and obliteration of the previous consumer protections for student applicants. Biden now thinks he can throw a few billion (small, in the grand scheme of outrageous academic debt) to buy votes in an election season and this somehow is expected to make amends for 14 years of government price-gouging on academics? Even after SCOTUS ruled against it?

What’s more, people who believe they’re entitled to a payout at the expense of someone else’s wallet go along with it, ironically labeling dissenters as “selfish” or “greedy.” Because in a world where you can lop off your schlong and call yourself a chick, you can also demand that someone else pay your grad school bills while defining their refusal to do so as “greed.”

Equally asinine, and solid proof that economic illiteracy in this county is an epidemic, are the comparisons of college debt-share to PPP. The government should never have enforced eminent domain over economic activity under threat of penalty resulting in PPP. The program also included restrictions for funds to be received as grants, provided businesses maintain certain levels of employment and pay back the funds if they ceased to meet the qualification requirements. Those who committed fraud are prosecuted. Meanwhile student loan “forgiveness” is just welfare for people who voluntarily signed up to assume a loan and are too irresponsible to pay off something like $12k in ten years’ time. Comparing the two is a medical sign that brain function has ceased. But hey, keep voting for the party that made this a reality for you.

As long as we’re going this route, our mortgages (my only debt as we live by the rule “if you can’t pay cash for it now you can’t afford it”), should be shared by everyone demanding that we pay for their six-figure humanities degrees. Oh, wait, we did that with “Too Big To Fail.”

This is just the first step — it won’t stop with college, just like it didn’t stop with mortgages, or health care. It especially won’t stop during an election season, when Biden needs as many vote-buying schemes GOTV tactics as possible.

---