Let’s cancel student loans – don’t forgive them, but cancel the program

In recent weeks, riots in Washington have focused on the issue of student loans. Almost every Democrat and leftist pundit has come out in favor of some relief for those who have accumulated debt for the college. Representative Roe Khanna (D-CA) For example, written a The Washington Post The opinion part with the admonitive title, “President Biden, it’s time to cancel student loans.”

What he wants from the president is to waive the students’ obligation to pay under their federal student loan agreement. It is highly questionable that the President has the legal authority to unilaterally waive student loans, but let’s put that problem aside.

I am going to argue that Congress should do something that it has the power to do without a doubt, such as repealing a law. The Constitution is the Higher Education Act of 1965 (HEA), one of many legislation passed by the Congress at the behest of President Lyndon Johnson. Johnson had many ideas for improving America through federal money and control — his “Great Society” and government intervention in education was at the top of his list. Title IV of the law created the Federal Student Loan Program.

The first question that should be raised is whether HEA is constitutional. Nothing in the Constitution allows Congress to legislate on education. Article I, Article 8 refers to the powers of Congress and does not include education. With the reading of the Tenth Amendment, education was one of the subjects that the founders considered to belong to “the state or the people, respectively.”

Nor does the Constitution authorize Congress (or the President) to lend money to college students or any other group.

If anyone were to ask James Madison or Benjamin Franklin or anyone else who drafted the constitution that it would give the new government the power to lend money to people who want to go to college, the answer would be a resounding “no”.

Unfortunately, no constitutional question was asked about the federal program in the 1960s. A long series of Supreme Court decisions from the mid-1930s made it clear that the courts would not bother with federal spending and control challenges. The “progressive” judges have elaborated on the General Welfare Clause and the Commerce Clause in order to remove the intentional restrictions of Section I, Section 8.

This is very bad because the Federal Student Aid program has become the biggest mistake in our history. This is responsible for the massive increase in the cost of higher education, the huge influx of poorly prepared and isolated students entering the college, the consequent fall in academic standards, the credential inflation (i.e., the requirement of many employers that applicants may have a college degree). Want to consider), and the statistical flow of the country, as more and more citizens have fallen victim to the conversion of enterprising faculties and administrators.

If we could take a time machine in 1965 and show legislators and the voting public what HEA would do, I don’t think it would have been legislated.

Returning to the student loan “crisis” is also an unintended consequence of HEA. It’s not really a crisis, as most student debtors are able to handle their payments, but there are some really scary stories about those six-figure loan students who can’t even pay the mounting interest. Yet, the burden of paying for many expensive college credentials that many students don’t really want and don’t use in their work is a big economic draw.

What is the solution?

This is certainly not a general waiver order for college loans. It will do nothing to alleviate the problems of many college students who are too expensive to get a very low utility degree. However, it will have a great impact on many heavily indebted graduates who have high-paying jobs in law, medicine and other professions. They can and should pay off their debts.

A good solution that some people support is to allow graduates who are drowning in debt to go bankrupt. It was approved until 2005, when Congress decided to amend the Bankruptcy Act to make it unusually difficult to get out of student loan debt.

Written on May 10 The Wall Street Journal, Richard Schinder rightly observed, “Extensive student loan forgiveness is a bad public policy. A legal system-a federal bankruptcy system-for those who really need debt relief, there are already rules, rules and consequences that are well-established. “

If bankrupt student loans can be redeemed, the worst horror stories will be addressed. I would support, especially if it meets a requirement that if a student goes bankrupt repaying his student loan, the college or university that educated him (or at least took his money in exchange for various courses) should cover him. Loss of taxpayers. This will force schools to think long and hard before admitting academically weak students who can only do this by taking Mickey Mouse classes.

These changes may go a long way in easing the student loan mess, but they won’t. The solution This would mean that federal student aid money would continue to help unnecessarily high tuition and entice many marginalized students into college because financing is easy.

The solution is to eliminate the Federal Student Assistance Fund altogether. (And yes, I would include college support for military veterans.) The HEA repeal bill could be written so that five years after the date of legalization, all federal loans and grants cease, giving students and institutions time to adjust. Alternatives such as the Income Share Agreement (where funders pay most or all of the student’s needs for the college in exchange for a contractual commitment that forces the student to pay a percentage of his earnings for a few years after graduation) will emerge. Colleges will find many ways to reduce costs that do not add as little or no educational value as the “diversity” office.

Higher education is flourishing and ineffective in the United States because federal intervention has turned it into a mass entitlement. Stop Federal Spigot and it will improve quickly.