Senator Thune’s stance on Biden’s Latest Student Loan Giveaway

WASHINGTON, D.C. (Press Release)

One year ago, the U.S. Supreme Court rightly ruled that President Biden did not have the authority to unilaterally forgive federal student loan debt. But that hasn’t stopped the president from contriving new student loan giveaways that amount to de facto loan forgiveness and will cost taxpayers hundreds of billions of dollars.

In April, the president announced his latest $150 billion student loan giveaway. Among other things, this latest scheme would waive accrued and capitalized interest for certain borrowers, and it would provide student loan forgiveness to 750,000 borrowers with an average income of more than $300,000.

This comes on top of the $475 billion loan forgiveness plan the president announced last summer. The so-called SAVE Plan will implement de facto forgiveness on a massive scale by creating a system in which the majority of future federal borrowers will never fully repay their student debt. The U.S. Department of Education estimated that undergraduate borrowers would expect to pay back just $6,121 for every $10,000 borrowed. That means that, on average, taxpayers will be taking on almost 40 percent of these borrowers’ student loans.

By one estimate, recent student loan policies will cost more than all federal spending on higher education in the nation’s entire history. For all this money, the Biden bailout plans do nothing to fix the actual problem: the cost of higher education. In fact, they could make things worse. For one, these plans don’t incentivize colleges to rein in their prices. They could also encourage students to increase their borrowing. And then there’s the troubling message it sends to students that they can expect to be bailed out for debt they take on, even though they agreed to repay it.

The president’s student loan schemes all involve a fundamental unfairness though. Many Americans never attended college. Others worked hard to pay off their entire student debt, or they worked to put themselves through college. Many Americans covered the cost of education by serving our country in the armed forces. Why should these Americans have to shoulder the massive cost of all this loan forgiveness now?

My Republican colleagues and I are pushing back against these misguided and costly policies. I’m also working on policies that help people pay off their student debt without putting taxpayers on the hook for massive amounts of money. My bipartisan Employer Participation in Repayment Act became law in 2020. It allows employers to make tax-free payments toward their employees’ student loans. It’s no silver bullet, but it’s a fiscally responsible way of easing the burden of student debt.

President Biden’s student loan giveaways are not the right answer, and they may cause more problems than he claims they will solve. Unfortunately, I suspect the president sees a chance to win a few votes he will need in November – at the expense of taxpayers across the nation.