Biden’s controversial student debt relief program is drawing increasing criticism

President Joe Biden’s student debt relief program is set for billions of dollars in loans, but whether it’s fair to burden others with that debt, and whether the Supreme Court will allow it, is far from decided.

The Biden administration on Nov. 18 asked the US Supreme Court to reinstate the program after it was blocked by a lower court.

The U.S. Circuit Court of Appeals for the 8th Circuit sided with six Republican-led states on Nov. 14 and temporarily halted Biden’s plan. A federal judge in Texas last week also shut down the White House student loan program and sided with a lawsuit brought by the Job Creators Network Foundation.

Depending on how the lawsuits play out, Biden’s order could see borrowers forgiven up to $20,000 in student debt.

Some states say they will tax student loan forgiveness monies as taxable income.

In Indiana, for example, 897,000 Hoosiers carry $30 billion in student loan debt, said Andy Nielsen of the Indiana Community Action Poverty Institute during a panel discussion hosted by Prosperity Indiana in October.

In Indiana, those who receive a deferral pay between $746 and $1,246 in state and local income taxes on that money, Nielsen calculated.

Indiana-based Frank Garrison is a public interest attorney with the Pacific Legal Foundation. They are among the many organizations suing the Biden administration. In a statement, Garrison said he made student loan payments for 10 years. While he would be among those who would receive debt forgiveness, the program would make the forgiven debt taxable income in Indiana and some other states.

The Pacific Legal Foundation is appealing an Oct. 21 rejection by the US Court of Appeals for the 7th Circuit to block the program.

‘abuse of power’

“It is clearly a violation and abuse of power to grant amnesty to millions of debts in an election year,” Garrett Bess, vice president of Heritage Action for America, a conservative advocacy group, told The Epoch Times. “It is clear that Americans are feeling the impact of inflation caused by Joe Biden’s policies, not just this one policy, and worsening the economic malaise.”

Like so many millions of others, Bess fought her way through college the hard way by working. Bess drilled wells — pump and pipe systems — to pay off his $27,000 student loan.

“It never occurred to me that someone would pay off my debt. I gave my word when I took out these loans,” he said. “Many Americans, even some who are going to be forgiven, don’t agree with this policy,” Bess said. “It goes against the American way of simply letting the government deleverage.”

What are the expectations for the future? What about the students this year or next year or all the years after that? asked Bess.

“There are only downsides. Obviously, if there is future debt relief, the larger country loses. Taxpayers lose, Americans lose,” Bess said. “This is by order of the Executive Branch. It’s not even done through the rulemaking process. Nothing beats better ideas being presented.”

Save along with Mitch

Purdue University president and former Indiana governor Mitch Daniels has blown up Biden’s plan and the colleges’ skyrocketing prices.

“The federal government has set a new standard in the sad catalog of its failures. President Biden’s debt relief announcement represents the final admission of the failure of a company flawed in concept, botched in execution, and riddled with duplicity,” Daniels wrote in a Wall Street Journal op-ed.

Purdue hasn’t increased tuition in 10 years while student enrollment and alumni donations have increased, Daniels said. Purdue is one of the few colleges or universities that do this.

College costs have tripled since 1980 and the average student carries $25,000 in student loan debt by the starting line, said Ann Petros, vice president of regulatory affairs at the National Association of Federally Insured Credit Unions, in the October panel discussion. She cited an American Bar Association survey of 1,300 attorneys, and 65 percent said they suffered from “overwhelming stress” because of debt.

That stress could now fall on American taxpayers. The University of Pennsylvania’s Wharton School of Business estimates that this move alone could cost around $1 trillion.

Develop better ideas

“This is something Congress really needs to act on in order to come up with sustainable solutions,” Bob Glaves, executive director of the Chicago Bar Foundation, said in an email to The Epoch Times.

Glaves said Biden’s executive exit was “only a partial and in many ways temporary solution at best, and Congress really needs to look at the issue more fully.”

Congressional action will almost certainly sail into stormy seas. In a letter to the Wall Street Journal, Republican Senator Rick Scott of Florida called Biden’s order to “transfer the debt of Ivy League graduates to the backs of construction workers” as “grossly unfair.” Scott introduced the College Act in August, which would embarrass colleges if students default on their loans. It would also force colleges with huge endowments to cover state student aid and require the Department of Education to release data on graduation rates and job placements.

Glaves had a few suggestions as to whether Congress is actually moving forward, including:

  • Include trade schools while there are stricter accountabilities for for-profit trade schools, which he said account for most of their loan defaults from trade students.
  • Use of the prevailing Federal Funds Rate for lending, which is also used in other contexts, e.g. B. in court decisions in federal court proceedings.
  • A uniform interest rate on all loans that would protect borrowers who make on-time payments from incurring additional interest that increases their loan balance.

Andrew VanSingel knows Glaves’ last point by heart. Today he is an attorney with the Internal Revenue Service. He said during the panel that he had accumulated $15,000 in student debt to cover his collegiate debt. Law school left him $220,000 in debt.

He said he made payments faithfully for 10 years, but the way his interest rate was wired increased his loan size to $335,000. Biden’s executive order and years of working in a debt relief program with Legal Aid helped him finally get out of debt, he said.

“I don’t feel like I started living my life three or four years ago. I haven’t bought a house, I have no children. I didn’t feel like I could until that student loan debt was behind me,” VanSingel said.

Randy Wyrick


Randy Wyrick has been a national and local journalist for four decades, working around the world.