STEPHEN MOORE: Biden’s Student Loan Forgiveness Fuels Default Surge

By Stephen Moore

Student loan debt has eclipsed $1.5 trillion during the Biden administration, prompting Washington to respond with significant loan forgiveness programs. This decision, viewed by many as favoring “deadbeat borrowers,” has stirred debate over who should bear the financial burden. Notably, universities charging tuition exceeding $75,000 annually are left largely unaccountable.

Expectations surrounding this policy have materialized, as evidenced by a recent Bloomberg headline: “Student loans drive U.S. delinquency rate to highest since 2020.” The relationship between student loan forgiveness and increasing delinquency rates is becoming increasingly clear, raising questions about the implications for those who diligently repay their debts.

Data from the Department of Education indicates serious delinquency rates are more than ten times higher than previously reported. This raises concerns about future loan repayments, especially as borrowers may anticipate new forgiveness programs on the horizon.

As policymakers continue to reward nonpayment, those who responsibly manage their debts face higher financial burdens. The expectation that student loan defaults will persist at elevated levels is now widespread.

In Congress, the proposed tax bill includes caps of $50,000 on undergraduate loans and $100,000 for graduate loans. These new limits aim to curb the escalating tuition prices that have surged two to three times the rate of inflation over the last three decades. The Wall Street Journal labels the initiative “The End of The College Free Lunch.”

While taxpayers may face increased liabilities due to growing student debt, this situation underscores the importance of incentives in economic policy. This episode highlights the pitfalls of debt forgiveness programs, but history suggests that policymakers may soon forget these lessons.