Government Watch / Politics

3 Biden Lies About His Student Debt Bailout Scheme

Student

By my count, there are at least three lies behind President Joe Biden’s “student loan relief” plan: a bald-faced lie, a half-lie, and a lie of omission.

First, in its Aug. 24 “fact sheet,” the White House advances the falsehood that college is the “ticket to a middle-class life.” That’s untrue.

The ticket to a middle-class life, now as ever, is finishing high school, working a full-time job, and getting married before you have kids. A recent report by the Institute for Family Studies by scholars Wendy Wang and Brad Wilcox lays out the data brilliantly. A stunning 97% of adults who follow those steps are middle-income or higher.

A middle-class life is eminently attainable without a college degree.

Why would the White House want to get this wrong? Maybe because it prefers to advance a narrative of government dependency over one of personal agency. But that’s a shame. Why not tell young people, as author Ian Rowe does, that it’s within their power to rise above their circumstances through hard work, thrift, and sensible life choices?

If young people are victims in the higher education business, it’s as victims of a political rhetoric that sells short the good effects of old-fashioned virtue while vastly exaggerating the benefits of degrees and credentials.

And what if you do go to college? Studies show that high price tag degrees don’t add value to lifetime outcomes. Students do just as well attending low-price institutions as prestige colleges, but those attending the latter are more likely to carry loan debt.

So, the Biden plan looks like a taxpayer-funded bailout for those who chose pricey schools over less expensive ones, insulting the previously frugal and creating moral hazard for the next generation of student loan borrowers.

Second, the White House “fact sheet” states that the “total cost of both four-year public and four-year private college has nearly tripled” since 1980, and that federal support “has not kept up.” In this case, the lie is in the second part.

While total costs have indeed ballooned, it wasn’t a proverbial “act of God.” Instead, the federal support the White House claims “has not kept up” is in fact the single-biggest reason why tuition prices keep rising. Economists estimate that 60% of federal credit extended to student borrowers through subsidized loans gets “passed through” in the form of higher tuition prices.

Colleges and universities see federal guaranteed loans for students as money on the table, and tuitions get hiked to capture those dollars. It’s a vicious cycle: Feds offer student aid in the form of grants and loans; that aid props up artificially high demand, given tuition prices; and voila, tuitions rise again. Rinse and repeat.

But reading from the White House “fact sheet” would lead you to think that the government has barely dipped its toe into the troubled waters of high college prices.

After reporting that Pell Grants now cover only one-third of the cost of a four-year public college degree (down from 80% in 1980), the “fact sheet” gravely points out that federal student loan debt has skyrocketed to $1.6 trillion.

So, the federal government is not a bystander after all. It has been eagerly handing out loans to students for degrees that many of them won’t even finish, helping to create degree inflation and saddling adults with decades of monthly payments.

Since degrees aren’t necessary for a middle-class lifestyle, and since all that debt negatively affects student borrowers (as the White House admits), one might conclude we should wind the whole thing down. Admit we’ve been telling kids a lie and making them pay for it. But the White House’s conclusion is that we should cancel the loans for those who don’t make enough money and keep the whole system going.

The third lie is harder to spot because it’s unstated.

The entire loan-relief plan carries on as though there is no other solution to the problem of student debt than this giant, unfunded $500 billon taxpayer giveaway (which is inflationary in a time of yet uncontrolled inflation). That’s ludicrous. There are many other solutions, ranging from refinancing to private charities.

But the simplest solution is probably the best one: First, own up to the fact that colleges and the federal government have been in cahoots to foist unconscionable debts on millions of Americans for degrees of questionable worth. Second, back away and let universities find a way to offer their goods and services without special subsidies muddying the waters.

For students who are now least likely to graduate, that will probably mean no college—and no debt. That’s a clean slate as they begin their working lives. For those most likely to graduate but who lack the means, it will point to more private loans, like the ones I just co-signed for two of my sons this year, with higher interest rates and, after needed regulatory reforms, better loan screening to figure out who is likely to graduate.

Finally, it would shift the burden from taxpayers to colleges to figure out how to pay for students who deserve to be there. Such a change might induce some colleges to funnel a greater share of endowment dollars into student aid. But it might well induce other schools to trim bloated administrative offices and theme park-style amenities for students, and try a fresh approach: competing on price.

In a couple of decades, two problems might be solved at once—the student loan crisis and the rising tuition crisis.


Reprinted with Permission from - The Daily Signal by - Catherine R. Pakaluk

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Marie Langley
4 months ago

Is anyone surprised by these lies? Everything that comes out of his mouth is a lie. The American people should know this by now. I think he actually believes his own lies as well.
LET’S GO BRANDON!!!!!!!!!

PapaGrouch
4 months ago

Only three…?

johnh
4 months ago

My Opinion: A college degree is only a stepping stone to get a job when you graduate & is not an automatic step to riches. Have read that only 40% of people that start college end up graduating. And there are many jobs that people can work without going to college degree. Having said that, I still feel a high school education is the most important thing for our youth.

Hal
4 months ago

Let’s be sure we understand who benefits from the Student Loans and who pays for it. No matter who pays for it, the Collegiate level Education Schools (and their staffs) get the money. They are the major beneficiaries of the Student Loan Programs. Most of the barrowing students get the educational skills, but the Institutions get all the money in the end… and thus, are being the true gainers of the Student Loan Program. The losers financially are not just the tax paying public, but mostly all American citizens (by a combination of “inflation” and “direct taxation”).

Dr Dave
4 months ago

I fully agree with all 3 of your descriptions of Biden lies. I almost started my comment by saying that Biden lying is not news – it’s standard operating procedure (SOP).

Rich
4 months ago

So what if the debt goes up another 4-500 billion (some estimates are at 1 trillion), it’s only tax payers money! We can ALL pay for what those who borrowed the money promised to repay. Let the future generations try and figure it out. THIS is responsible government that is bringing us closer together! So how’s the communist administration treat’n ya’ now? Want more of the same, just vote socialist/Marxist/communist democrat in November.

Moses
4 months ago

Like the accountant told me in 1975, if the gov’t. made beer it would cost $50. a six pack and they would still be losing money. I added later, and it would taste bad. Why democrats think it is a good idea to have the gov’t. in charge of anything is beyond me.

Rich
4 months ago
Reply to  Moses

It’s called communism.

Robin Boyd
4 months ago

Government intervention into our social lives is always a disaster for citizens. Progressives in government want as many as possible to attend college indoctrination into Socialism. Taxpayers pay to undermine society into Socialism.

Jake
4 months ago

How about – Reduce the salaries of the professors and other high level staff at the colleges/universities, and then take those $$$ and start paying the loans off! They are the ones that benefitted from the government-taxpayer funded loans, so let them feel the pain of paying them off! Yes. I know that is just a drop in the lake of debt, but it would make me feel better. The folks with the loans signed the paperwork for the loans, so ultimately, they MUST pay them off themselves.

johnh
4 months ago
Reply to  Jake

Good points & pinpoints the huge salaries & perks at the colleges that jumped on the bandwagon to raise tuition to get more of the student loan dollars. The Universities paying the top management and football coaches…….+$1-million per year must stop before the greed gets worse.Take any university & compare annual salary of President in 1960-1990s to the huge salary today & you will see a real problem.

Hal
4 months ago

I fear that the true target of student loans is not clearly identified. It is the educational top tier of the educational system that is profiting from Federal Student loans. It is one of lassos the rustler DemocRats throw at the taxpayers that deceives the clever way the DemocRat Party attempts to lock-in the support of high-level Academia intake of loan money! Yes … many students benefit from the loans, but it is the Educational Institutions that stuff their pockets … they get their money for sure, and the taxpayers have to cover shortages of payment by students.

Enuf Said
4 months ago

It amazes me that people STILL listen to anything Biden says. If you want to be lied to–go to the bank-get twenty $5 bills and spend it at the strip club. You will hear MORE truth there than Biden has EVER uttered.

Rich
4 months ago
Reply to  Enuf Said

Unfortunately due to inflation you better get $10 dollar bills.

Willie
4 months ago

Government is to big and Biden has not told the truth once about anything.Biden is so evil the truth ant in him.

MariaRose
4 months ago

My biggest peeve is this “forgiveness of the loans” will become a need to redo every year and no one is held responsible but us taxpayers for the cost. I don’t know about anyone else, but I am tired of paying taxes (more than I need to) so that others don’t have to learn how to be financially stable and self-sufficient. They are encouraging dependency on government handouts as a way of life so they can control the mob. Well, since I get no government handout that relieves me of tax liability, I am not happy to pay the debt of someone who didn’t even read the fine print when they got those loans from those name-brand colleges and have no jobs in their ‘dream’ worlds. Life has consequences for living it.

Gerald
4 months ago

re: middle class life: there are FIVE requirements for this. They are:
Yes, finish high school
Yes, get a full time job (and don’t quit till you have another job
Yes, don’t have children out of wedlock
And, don’t consume addictive substances, or engage in addictive activities.
And, don’t engage in illegal activities.

Rich
4 months ago
Reply to  Gerald

And to keep our democracy intact, don’t vote democrat.

Kim
4 months ago
Reply to  Rich

…republic, but I agree. Flush the dems out of government.

Michael Lewis
4 months ago

The root of problem with the 2008 housing bubble and student loan forgiveness is the lack of a negative feedback loop to stop future economic disasters. Government failures created both problems. Government is not the solution it is the problem. A bunch of weekend warriors who get paid more than the flyover people who have to live on a budget and cannot print unlimited money to handle shortfalls!

There are three branches of government. Why hasn’t Congress stood up to Biden and reminded him all expenditures of public money must begin in the people’s house. Biden is stepping on the authority of the legislative branch. Why don’t Republican Congressmen put on their big boy pants and instruct the Executive to restrict his machinations to the authority granted his branch and office.

HocasPocas
4 months ago
Reply to  Michael Lewis

Because they are all in this together. They’ve been saying that since around March of 2020.

P2burner
4 months ago

I believe that, soon, half of the gender studies grads will be on food stamps and the the other half will be at trade school learning a valuable skill, like plumber or electrician (if they are willing to work at all, that is)

Nick Murphy
4 months ago

Just apply my foolproof Democrat lie detector. If their lips are moving they are lying guaranteed

Nick Murphy
4 months ago

Amtrak lost money charging $25 for a hamburger 5 years ago

Greg
4 months ago

When the federal government decided to take over the student loan program, it was with the caveat that the federal government would make $6 per $100 (6%) on said loans. The government is SO inept and deceitful that they LOSE $8.10 / $100. And people want them in charge of everything! I want them in charge of very, very little.

Philip Hammersley
4 months ago
Reply to  Greg

The government loses money on EVERYTHING they do! A fellow running for House in IN once said, “Federal aid is liking giving yourself a blood transfusion with a leaky hose!” SPOT ON!

HocasPocas
4 months ago

They lose money that they haven’t earned. If they had to earn the money that they so freely spend, it would be a different story

Hal
4 months ago

With one exception … they seem to garner the opposite with their incomes and perks!!!

Hal
4 months ago
Reply to  Greg

Balanced Budget Amendment … anyone???? It should include a clause that if they elected politicos allow overspending as allowed in the budget, they get punished by chopping off a portion of their salaries and operating expenses, say by the same percent that the budget is exceeded.

Michael Venaccio
4 months ago

So..we all understand that what is attempting to be done may at the very least be illegal, since he cannot transfer debt from one group to another unless congress allows it.

That being said, what of the thousands of conservative organizations that have no trouble asking me for $$$$ on a daily basis going to file the applicable federal lawsuits?? May as well put my contributions to work.

The all should consolidate, think of all the money that would be saved in general and administrative costs and could be used for lawsuits, contributions to conservative candidates, etc.

Seems that all these organizations are great at offering well thought out opinions-that most of us reading agree with anyway-are happy with the way things are as they can use the situation to raise money.

DO SOMETHING…NO MORE TALK, how about some suggestions.

HocasPocas
4 months ago

I have to agree with you Michael. I had well over 20 text messages today and I didn’t even count the emails. It seems like as soon as I delete one I get 2-3 more. It’s ridiculous. I don’t even open them anymore because I know they are just soliciting money

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