Actions Have Consequences

Student loans in America amount to more than $1.7 trillion, according to the Federal Reserve. That is the second-largest amount of debt for U.S. households, behind mortgages. Around 46 million people have student loan debt (13% of the total population). Of those, 8 million are in default on their student loan. The average student loan debt is $32,731. Further, 40% of people with student loans didn’t finish college, and 61% of those in default owe less than $10,000.President Biden has said he favors forgiving $10,000 of student debt, but Congress hasn’t warmed to the idea and he has been relucent to do it by Executive Order (EO). Senator Elizabeth Warren, D-Massachusetts, said Sunday on Face the Nation, she is pushing Biden to forgive $50,000 of student debt. She claims Biden has the authority to do it by EO and he needs to do it before the midterms.

In the late 1990s, then U.S. Senator Joe Biden played a role in helping establish and expand the current student loan system, which makes taxpayers co-signers on every student loan. Biden was one of the architects of bankruptcy reforms making it hard for those with student loan debt to discharge their student loan debt by declaring bankruptcy. President Biden likely regrets that.

Three observations:

First, the government and higher education created the student loan debt crisis.

The default crisis is a direct result of the fed’s reckless student lending policy. There is certainly a role for government in fixing it because government created it, but that role is not to cancel loan debt. Colleges and institutions of higher learning ‘sold classes’ to students who had no business going to college. Colleges were more interested in increasing revenue than in educating students.

Second, forgiveness of student loan debt will increase inflation.

The Committee for a Responsible Federal Budget(economists) estimate cancelation of 10k of student loan debt per person will increase inflation by .5 percentage rates over the next year. Senator Warren (not an economist) disagrees.“As President Biden himself says, the way we deal with inflation is not by making people poorer. The way we deal with inflation is we attack, high prices head-on, such as price gouging. We straighten out the supply chain, so goods can come in to people. Canceling student loan debt is something that would be good for people all across this country and more importantly, good for our economy overall,” Warren said.

The government has neither the manpower nor the brainpower to police price gouging, let alone fix the supply chain? Government bailouts and giveaways are why we have inflation.

Third, borrowers should be responsible for their student loans.

While the government’s irresponsible lending practices and college’s zeal to sell classes to people played a role, the borrower made the decision to incur the debt. It is not the taxpayer’s responsibility to ‘bail them out.’

Government should reduce administrative fees and seizures on borrowers who are in default. Those fees often result in more than the principal. They need to make sure low-income borrowers never face a situation where they can’t make the monthly payment.

They should guarantee those who owe less than $20,000 and who are making payments on time never go backward because of fees. The feds should penalize colleges where class selling is a practice and limit their ability to be eligible for student loans. Ultimately, the person who signed the note, and not the taxpayers, should be responsible for the debt. Actions have consequences.

President Biden has extended a repayment moratorium on repayment, interest and collections for federal student loans to August 31st. This is the fourth extension since Biden took office. Expect some sort of student loan debt forgiveness before the midterms.

With $4 gasoline and record food prices, Democrats must do something to excite their base. If Biden cancels student loan debt, it will reinforce the idea Americans should rely on the government to fix their problems when they willingly assumed the risk.

Note: Steve Fair is Chairman of the Republican Party in the Fourth Congressional District of Oklahoma. Steve’s conservatives commentaries appear regularly at the news website. Contact him by email at His blog is