Patterico's Pontifications

6/9/2023

Down to the Wire on Student Loan Forgiveness

Filed under: General — JVW @ 6:26 am



[guest post by JVW]

Earlier this the week, Congress passed a measure in a bipartisan vote (ok, it was two House Democrats joining their Republican colleagues and two Senate Democrats and one independent, Krysten Sinema, voting with Republicans) to roll-back President Biden’s arguably illegal Executive Order which provided many student loan debtors with up to $10,000 in loan forgiveness, $20,000 for those who received loans geared towards low-income families. On Wednesday, President Biden vetoed the legislation, subjecting us to one of his typically grouchy and demagogic justifications:

Unsurprisingly, the President employed the standard Democrat trick of comparing student loans to the PPP loans which were offered to small businesses during the pandemic. This is pretty much claiming that forced closures of businesses by the government, under penalty of prosecution, are very much equivalent to the entirely voluntary decision to enroll at an institution of higher education and run up debt chasing a degree. This has been one of the most insipid talking points that Democrats have come up with to defend their gross overreach, and it deserves absolute derision from anyone observant enough to realize how inapt the comparison truly is.

During the negotiations last month over the debt limit, there was at one point a rumor of a compromise in which the White House would further scale back the program, currently estimated to cost at least $400 billion and up to $1 trillion over ten years, in return for the GOP agreeing to codify it into law. Republicans rightly concluded that the Supreme Court is fairly likely to determine that the President lacks the authority to unilaterally impose this program without the assent of Congress. In the end, the only mention of student loan forgiveness in the debt ceiling compromise is that the White House and Congress agreed that the freeze on loan repayments will be lifted no later than the final day of August, nearly 42 months after it was implemented.

And this ambiguity on the fate of loan forgiveness coupled with the resumption of required debt payments has the left freaked out. A piece by David Dayden at The American Prospect is downright livid that our hip, young, progressive college graduates might not get Uncle Joe’s big wet (pervy) kiss on the cheek:

By the end of this month, the Supreme Court will decide whether or not 43 million student loan borrowers will see between $10,000 and $20,000 taken off their debt load. But regardless of the Court’s opinion, by the fall, anyone with a remaining loan balance will need to make monthly payments again, for the first time in three and a half years.

[. . .]

That leaves the administration in the dicey position of managing a consequential rollout (affecting more than three times as many Americans as the Obamacare exchanges) with an enormous potential downside. Millions of young people who have voted for Democrats in record numbers in the past two elections will endure what will feel like a new financial obligation of hundreds of dollars per month. And if the history of the student loan program is any guide, the process will overflow with errors, mistakes, and frustration.

Very helpfully, Mr. Dayden lays his cards on the table from the onset: Student loan repayment is going to suck, and it is going to hit a key voting constituency for Democrats. It’s good to know that principle and policy wisdom is secondary here to an exercise of raw political power. Democrats don’t usually say that sort of thing out loud. More from Mr. Dayden:

The Office of Federal Student Aid (FSA), which is tasked with managing this impending chaos, has no additional funding to do it, and its budget was already inadequate. But some advocates argue that resources are just a tiny part of the problem. “I’m not aware of any instance where a creditor restarted a 40-million-account portfolio. That’s at a scale that finance doesn’t operate in, let alone government,” said Mike Pierce, executive director of the Student Borrower Protection Center (SBPC).

[. . .]

“Even if we dumped all of the money in the world on them, they couldn’t get this right,” added Thomas Gokey, an organizer with the borrower advocacy group Debt Collective. “Only good things happen when the payments are kept off, and only bad things result from turning them back on.”

Amazing, isn’t it? Even if given unlimited funding, the government would fail at managing the portfolio of the millions of student loan accounts, at least according to an activist for debt forgiveness. Coming in strong with “the government is going to fail at this task, so they might as well just throw in the towel” is quite the flex for an ideology which wants the same government to manage virtually every aspect of our lives, from our education to our health to our employment to our families to our retirement. But nobody ever tried to claim that there was much intellectual consistency in progressive dogma. Moving on:

If you want to see an example of how this might spiral out of control, look no further than the Medicaid purge now happening across the country. The end of the pandemic-era continuous coverage requirement meant states could resume eligibility checks that can drop people from the rolls. Dozens of states are now eagerly doing so, with hundreds of thousands losing coverage—with most of the cuts happening due to procedural reasons rather than enrollees actually lacking eligibility. So if the renewal form went to the wrong address, or the state website for re-enrolling doesn’t work, or you just didn’t hear about the new termination process, you’re out of luck and kicked off your health insurance.

All this tends to tell me is that staunch progressives do indeed want everyone to be entirely dependent on one government program or other, and they don’t want the citizen to have any obligation to actively participate, other than being told by the government what to do and when and where to do it. The idea that asking people to go back to work and stop relying upon pandemic-era handouts is anathema to this worldview, whether it be in the area of health care or in education.

Writing in response to Mr. Dayden’s argument, Noah Rothman makes clear why the progressive argument is a whole lot of hooey:

We are supposed to feel bad not just for borrowers who will experience administrative errors but anyone who took on student-loan debt. After all, these are people with “a high propensity to spend,” Dayen adds. True enough. Research indicates that the student-loan-debt pause led borrowers to take on even more debt. Restoring a regular debt-repayment schedule will provide younger voters with a clearer picture of their financial obligations. The activists hope those voters will thank Democrats for the education in fiscal responsibility by throwing them out of office on their ears.

Take a moment to contemplate the point being made at the link in the preceding paragraph: Despite what the left earnestly wants you to believe, forgiving debt doesn’t really allow for young people to move out of the family home into their own living spaces, pay off credit card bills, and save for the future, it simply encourages them to take on debt in other areas. Many progressives, recognizing this fact, like to portray this as Millennials helping to stimulate the economy and thus speed up our recovery. Imagine that. I wouldn’t mind having the government “forgive” a mortgage payment of mine, and I promise to use the savings for a Hawaiian vacation to help the islands goose their tourism back up to pre-pandemic levels. That is the sort of tortured logic that we’re hearing from the debt-forgiveness crowd. They are, as Mr. Rothman rightly describes them, “self-righteously rapacious.”

When this crowd is smacked down by the Supreme Court (here’s furious knocking on wood coming from me), don’t expect the pressure on the Biden Administration to end. Loan forgiveness advocates are now saying that if the 2001 HEROES Act doesn’t allow the President to forgive hundreds of billions in loan debt, then the 1965 Higher Education Act ought to do the trick. Joe Biden, who spent long enough in the Senate to theoretically have developed respect for the legislative branch’s role in costly spending proposals, deserves to be pestered by these grown-up children and if he decides in his Rooseveltian delusions to take a second bite at the apple, then impeachment proceedings ought to begin immediately.

– JVW

15 Responses to “Down to the Wire on Student Loan Forgiveness”

  1. Was kind of hoping the Court’s decision would come today, but I guess that is not going to happen.

    JVW (27a07d)

  2. And this shows why INS v Chadha was such a terrible gift of power to the executive.

    Before that, either House of Congress could block a new regulation by a simple majority vote. The rationale was that passage of a new law could be blocked in the same way, and regulations were delegated legislative power.

    The single-house veto was part of 196 laws delegating powers.

    After the Supremes struck down the veto, the only way to block a new regulation was passage of a new law, repealing the regulation, and presentment to the executive for signature or veto.

    To the degree that the loan forgiveness is legal, it is a delegated regulatory power, and should be blockable by either House as a matter of course.

    Justice White had the best of it, an argument as true today as Harlan’s dissent in Plessy.

    JUSTICE WHITE, dissenting.

    Today the Court not only invalidates § 244(c)(2) of the Immigration and Nationality Act, but also sounds the death knell for nearly 200 other statutory provisions in which Congress has reserved a “legislative veto.” For this reason, the Court’s decision is of surpassing importance. And it is for this reason that the Court would have been well advised to decide the cases, if possible, on the narrower grounds of separation of powers, leaving for full consideration the constitutionality of other congressional review statutes operating on such varied matters as war powers and agency rulemaking, some of which concern the independent regulatory agencies.

    The prominence of the legislative veto mechanism in our contemporary political system and its importance to Congress can hardly be overstated. It has become a central means by which Congress secures the accountability of executive and independent agencies. Without the legislative veto, Congress is faced with a Hobson’s choice: either to refrain from delegating the necessary authority, leaving itself with a hopeless task of writing laws with the requisite specificity to cover endless special circumstances across the entire policy landscape, or, in the alternative, to abdicate its lawmaking function to the Executive Branch and independent agencies. To choose the former leaves major national problems unresolved; to opt for the latter risks unaccountable policymaking by those not elected to fill that role. Accordingly, over the past five decades, the legislative veto has been placed in nearly 200 statutes. [Footnote 3/2] The device is known in every field of governmental concern: reorganization, budgets, foreign affairs, war powers, and regulation of trade, safety, energy, the environment, and the economy.

    Kevin M (2d6744)

  3. “If you borrow money, you pay it back”

    –Tim Scott, stating the once-obvious

    Kevin M (2d6744)

  4. “I’m not aware of any instance where a creditor restarted a 40-million-account portfolio.”

    So, what they really want is either 1) permanent suspension of repayments or 2) cancellation of all student debt. Otherwise they have to restart the portfolio.

    Left unsaid is resumption of rent payments. Hey, how about forgiving all capital gains taxes? That would take such a burden off the IRS.

    Kevin M (2d6744)

  5. Great piece, JVW. I’m a bit tired of talking about Voldemort.

    Kevin M (2d6744)

  6. Without the legislative veto, Congress is faced with a Hobson’s choice: either to refrain from delegating the necessary authority, leaving itself with a hopeless task of writing laws with the requisite specificity to cover endless special circumstances across the entire policy landscape, or, in the alternative, to abdicate its lawmaking function to the Executive Branch and independent agencies. To choose the former leaves major national problems unresolved; to opt for the latter risks unaccountable policymaking by those not elected to fill that role.

    no, they could require the regulations to pass Congress to be effective, with Congress having the power to change themm also, and/or they could make them temporary, lasting for say, no more than two years or until Congress passed a version

    The legislative veto is simply not part of the constitutional structure of the United States.

    The CRA by the way, does override rules of Congress because part of it is also a rule. So it is not affected by the filibuster,

    Sammy Finkelman (300a8a)

  7. Fantastic post that really lays out the differences between the party of American bankruptcy and personal responsibility.

    The left always wants to have Americans indebted to the government as they will perpertually vote for those who give them more goodies till we become the Weimar Republic.

    When you rob from Peter to give to Paul, you can always count on Paul’s support.

    NJRob (762bec)

  8. Nothing Joe Biden has done irks me as much as letting student borrowers off the hook. Yes, Trump has done much to weaken the moral fabric of the nation, but how does Biden’s unconstitutional pandering help people learn accountability for debts?

    The cynical part of me thinks that it is just a payoff to people (college graduates) who are more likely to vote Democrat. And, as I’ve stated before, my guess is that STEM majors earn more after graduation, and are thus more likely to pay back loans, whereas the fields of study favored by progressives don’t pay as much. So, study something that fosters progressivism, and then skate on your student debt.

    Broadly speaking, the Democrats are the party of Mommythink, and the Republicans are the party of Daddythink. Moms want to console their children, empathize with them, and go easy on them. Feelings are dominant.

    Dads tend to practice tough love, discipline, and consequences. Reason has the upper hand. Moms are more likely to be the ones shielding their children from the real world, while dads get their children ready for the real world.

    There is a reason that, if only women voted, Democrats would win virtually everything, and if only men voted, Republicans would almost always prevail.

    Of course, there are exceptions (some dads are the indulgent ones, while mom rules with an iron fist), and these roles are more blurred now than they used to be. Men are becoming more and more feminized over time.

    In 2011 Adam Carolla wrote a book called “In Fifty Years We’ll All Be Chicks”. He later said he had no idea it would really be five years.

    norcal (8b5267)

  9. I’m surprised not to read in any commentary about student loans any comparison to the “depositor bail-outs” in failed banks. The depositors knew going in that there was a $250K insurance limit. They signed contracts. They are adults who must be presumed to know what they were doing. But when depositors found themselves in money trouble, the feds come in and pretend the contracts don’t REALLY mean what they say. Sounds like student loans to me. Santa Claus Federal Reserve money falls like the gentle rains of heaven, and lenders and borrowers are merely voters to be bought.

    Pouncer (060d6a)

  10. Pouncer (060d6a) — 6/9/2023 @ 2:07 pm

    Correct, Pouncer. Those people also need to eat their consequences. Anyone who has over 250K in one bank is an idiot.

    norcal (8b5267)

  11. What they should do is extend deposit insurance to any account not paying interest or that contained t

    Sammy FInkelman (1d215a)

  12. they could require the regulations to pass Congress to be effective

    Sammy, you don’t often say something stupid, but you do here.

    There are more than 50 new regulations every week. Congress would not be able to keep up, which is what Justice White was saying. The veto allowed them to say “NO!” once in a while, rather than trying to read, understand, and OK each new regulation (over 3000 per year) as if it was its own law.

    Kevin M (2d6744)

  13. The legislative veto is simply not part of the constitutional structure of the United States.

    It is not in contravention of the Constitution either. To declare that a challenge to a regulation requires presentment, when an unchallenged regulation requires neither congressional approval NOR presentment is not logical.

    Instead, the Executive is given nearly unfettered power to make law, subject only to something passed over his veto. The court, had it wanted to protect the constitution would have declared that every delegation of power that contained this veto as a check and balance was wholly unconstitutional. Of course that would have dismantled 90% of the federal government, so they found a worse course of action.

    Kevin M (2d6744)

  14. Sounds like student loans to me. Santa Claus Federal Reserve money falls like the gentle rains of heaven, and lenders and borrowers are merely voters to be bought.

    But it isn’t. There is a modern problem with bank runs. Back in the day, you had to get out of bed, put your shoes and coat on and go down to the bank and wait in line, during normal hours, to get out all your money.

    But now, you can do it all from bed. In an instant. Take all your money out of Bank X and send it to Bank Y. Everyone can do it at once, and be quick about it if you have more than $250K there.

    The threat was that banks would go under, in batches, faster than you could say Tim Berners-Lee, the moment their names came up in some Twitter rumor.

    So they opted to stop a panic before it became one. It was a surprisingly good move.

    Kevin M (2d6744)

  15. Anyone who has over 250K in one bank is an idiot.

    Businesses have substantial funds on deposit. You argue that a business with $10 million in ready cash should have bank accounts at 40 different banks? That’s an embezzler’s dream.

    Kevin M (2d6744)


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