Portman, Grassley Op-Ed in Washington Examiner: “Biden’s Student Loan Debt Transfer is an Abuse of Executive Power”

September 8, 2022 | Portman Difference

WASHINGTON, DC – In a new Washington Examiner opinion piece, Senator Portman (R-OH), and Senator Chuck Grassley (R-IA), members of the Senate Finance Committee, detail concerns after President Biden announced that he would unilaterally cancel up to $20,000 for certain borrowers who hold federal student loan debt.

The senators discuss the far-reaching consequences of the one-time debt forgiveness, which saddles future generations with even more debt to pay off in the form of higher taxes at a time when wages are already struggling to keep up with inflation.

Read the full op-ed here. Excerpts below:

Biden’s student loan debt transfer is an abuse of executive power
By U.S. Senator Rob Portman and U.S Senator Chuck Grassley
Washington Examiner

Last week, President Joe Biden, without authorization from Congress, announced he plans to transfer roughly $500 billion worth of student loan debt from the borrowers who took out the loans to hardworking taxpayers across the country. Other presidents, Republicans and Democrats, have attempted to overstep their authority, and we have never been shy about criticizing them. But in our time in the Senate, we have never seen a president attempt to spend up to a trillion dollars with the stroke of a pen.

To be clear, Biden does not have the authority to cancel billions in student loan debts without congressional authorization. House Speaker Nancy Pelosi (D-CA) agreed that the authority is not there when she explained that “people think that the president of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay but he does not have that power. That would have to be an act of Congress.” The Department of Education issued a memo in January 2021 agreeing with the speaker that the president does not have the authority to cancel student loan debt.

In our system of checks and balances, this major decision regarding loan forgiveness must be made through the legislative process, not the stroke of a pen at the White House. It’s often said that Congress doesn’t hide elephants in mouse holes. Estimates of the cost of this program range from $500 billion to $1 trillion. For days, the White House refused to release an estimate, claiming they didn’t even know how much this would cost taxpayers. Numbers that large can be hard to put in context, but that is the equivalent of six to 13 times the entire discretionary budget Congress appropriated for the Department of Education earlier this year.

The bulk of that Education Department budget is aimed at those who need help most: low-income families. This debt transfer does the opposite. A college education is an investment, and students who took out loans to pay for their educations typically make their investment back manyfold. For an average loan of $30,000, a bachelor’s degree is worth about $2.8 million over the course of a lifetime.

For the same amount it will cost taxpayers in borrowed money to pay off the debts of those who already got a college education, including well-off graduate degree holders, Congress could have doubled the Pell Grant for a decade to help those most in need access a college education. To be sure, there are some borrowers who have difficulty making payments. That’s why Congress has already created a number of programs to help, such as income-driven repayment plans. These are especially beneficial for borrowers with low incomes, as some borrowers see no monthly payment at all.

Prominent liberal economists agree that this uptick in spending will contribute to higher inflation. Jason Furman, a former economic adviser to President Barack Obama, has warned that everyone will pay for this debt transfer, either in the form of higher inflation, higher taxes, or lower benefits in the future. Former Clinton administration Treasury Secretary Larry Summers, who was one of the first to argue that Biden’s big 2020 spending bill would lead to today’s high inflation, is again saying that “student loan debt relief is spending that raises demand and increases inflation.” It seems the White House is willingly repeating mistakes of the past.

 

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