Why Biden’s Student Loan Bailout Workarounds Won’t Solve the College Tuition Crisis
Despite the Supreme Court ruling against the Biden administration’s student loan bailout earlier this year, the White House is moving forward with lawless workarounds that will do nothing to address the core college tuition crisis.
The Biden administration has already wiped out nearly $130 billion in student loans for 3.6 million borrowers. It’s the quickest pace of student debt cancellation since the government began guaranteeing educational loans over six decades ago. And last week the White House added to their total, announcing the forgiveness of student loans for roughly 800,000 borrowers.
How has the Biden administration been able to get away with this?
The administration has employed various workaround tactics to sidestep the Supreme Court’s ruling. Among elements, the White House has updated bankruptcy guidelines, which make it considerably easier for borrowers to ditch their student loans.
Additionally, income-driven repayment plan durations have been modified, and allowable monthly payment levels have been adjusted. While the changes may seem marginal, they accounts for tens of billions of dollars—money that taxpayers are on the hook to cover.
Rather than addressing the underlying cause of the student loan crisis, this approach signals to university administrators that the bank of Uncle Sam is open for business—and it’s ready and willing to cover college costs, no matter how absurd.
The strategy is little more than a de facto blank check to institutions of higher learning. This dynamic creates a loop where institutions, assured of continued financial support, are allowed to perpetuate excessive spending on amenities and administrators while shifting the burden to taxpayers and students.
Take Texas Christian University, which recently announced a significant tuition hike that will make the school even more expensive than Harvard University. And TCU isn’t alone. This past summer, several colleges including Ohio State University, the University of Oklahoma, and Rutgers University announced tuition hikes for the current freshman class. According to The Wall Street Journal, average student tuition costs at the median flagship school have surged by 64 percent over the past two decades.
Unfortunately, the Biden administration refuses to explore other options beyond throwing taxpayer dollars at the problem when and wherever possible. Rather than encouraging universities to increase tuition rates with government handouts, policymakers should hold college administrators accountable.
Part of that means colleges should have some financial skin in the game by underwriting at least a portion of loans. That way, universities have a stake in the career success of their alumni. College leaders should also be pressured to justify tuition rate hikes and provide students with transparent, realistic expectations of what career outcomes degree holders can expect following graduation.
These are policy elements that congressional Republicans proposed earlier this year, but the ideas have gained little traction among the Democratic caucus. Why? Because it undermines the Biden administration’s electoral strategy. As presidential candidate Nikki Haley noted, their bailout strategy is “vote buying—plain and simple.”
It couldn’t be clearer that the status quo around college tuition hikes is unsustainable. Yet Biden continues to give colleges a blank check to follow TCU’s lead and raise costs even further.