Taxpayers in Suffolk County and across the country will be on the hook to pay off another $7.7 billion in new student loan debt, and President Biden ordered the Treasury Department to forgive the loans of 160,000 college graduates.
To date, President Biden’s debt transfer programs impact 10% of all student loan borrowers and subsequently passes on the debt to everyday working Americans, including all in Suffolk County.
Biden’s original plan, blocked by the Supreme Court, planned to spend $430 billion to write off student loan debt for 30 million people.
These write-offs transfer the debt to other taxpayers – many of whom paid off their loans and many more who never went to college at all going straight into the workforce or perhaps going into the trades or opening their own business.
President Biden pitched his plan as a modification of existing rules and claimed the expenditure did not require Congressional approval. Chief Justice Roberts said in a written opinion that using the descriptor “modification” was “true only in the same sense that the French Revolution ‘modified’ the status of the French nobility.”
After being blocked by the Supreme Court, the Biden administration announced that it would seek alternative ways to achieve debt cancellation by adjusting repayment rules within existing programs. It is expected that many of these efforts will be challenged in court. Critics argue that Biden's student loan debt forgiveness plan primarily benefits the upper-class students.
The Urban Institute reports that the top 25% of households hold nearly half of all student loan debt, with 40% of the debt being held by students with advanced degrees such as lawyers and doctors.
Sen. Tom Cotton (R-AR) introduced the No Bailouts for Campus Criminals Act out of fears that taxpayers could be forced by the Biden administration to shoulder the student loan debt of violent anti-Semitic campus protestors that have been wreaking havoc for months on campuses across the country.
The proposed bill by Senator Cotton would prevent any student who is convicted of any offense while protesting at a higher education institution from having their federal student loans forgiven or modified.
Many find the transfer of student debt to other taxpayers immoral or simply bad policy. Common refrains from critics are, “You took the loan, you pay the loan back.”
"Debt forgiveness is not fair, but more importantly, it is bad policy. The policy is pure political opportunism that is destined to worsen the situation”, says Rebecca Neumann, professor of economics at the University of Wisconsin-Milwaukee.
Critics including the New Civil Liberties Alliance argue that the taxpayers shouldn’t have to foot the bill for other people’s choices to attend college and that institutions should be on the hook for unpaid student loans. They have challenged Biden’s debt transfer plan in court.
The latest $7.7 billion move by Biden brings the total number of people to benefit from his debt transfer push to 4.75 million. The total student debt transfer approved by the Biden administration is $167 billion.