Blunt: Biden’s student loan forgiveness proposal is misguided

Ty AlbrightJune 17, 2022

WASHINGTON – This week, Missouri U.S. Senator Roy Blunt spoke on the Senate floor to raise his concerns over President Biden’s misguided proposal to unilaterally forgive student loan debt, which would disproportionally benefit high-income Americans.

As Blunt noted, 87% of Americans do not have federal student loans, and 60% of student loan debt is held by households with incomes over $74,000.

Following Are Blunt’s Remarks:

“Madam President, I want to talk a little bit about the whole idea of loan forgiveness, student debt forgiveness.

“I’ve spoken many times on the floor about the importance of higher education, both college education, and apprenticeships, and other kinds of work preparation. I’m the first person in my family to ever graduate from college and later was the president of a university, and it’s important, there’s no doubt about that.

“I’ve often also talked about one of the reasons I think our system works so well is, in post-World War II America, we’ve not tried to run higher education. We’ve tried to encourage and support higher education. You know, you could use your student benefits, whether they were student loans, or VA benefits, or other benefits, at any accredited institution. And the federal government doesn’t decide what’s an accredited institution.

“I think the way that we found that balance has been really important for higher education. I think it’s why we have the best higher education in the world. But I think the balance is one that we ought to be thinking about maintaining. And we should be concerned when we begin to get into that balance in a way that the government does more than it should do, or, frankly, less than it should do.

“You know, this is the 50th anniversary of the Pell Grant program. I’ve been a big supporter of Pell Grants. I know you have, too. And, during the time we’ve worked here together, we’ve expanded Pell Grants to year-round Pell Grants. One of the great ways to keep college costs down is to finish, to be able to—if you’ve got a pattern that’s working, particularly if you’re a first-time college student in your family, or an adult that’s gone back to school, if you’ve got something that’s working, and you can keep it working, we ought to do that.

“There was about a 10-year period where we had two semesters of Pell Grants, and then there’s a summer without Pell Grants. And that didn’t really work out all that well. And every higher education person I know believes we did a really great thing by going back to year-round Pell. We’ve also increased the Pell Grant award. In fact, in the last seven years, we’ve increased the annual individual award by over $1,000, $1,120. We’ve reinstated year-round Pell.

“The Pell Grant is targeted. It’s targeted to people who need help going to school. And, you know, when we were talking, I think, very wrongly about free higher education—which, I think, would really be expensive if you had free higher education and the government became the payer. I’ve said the Pell Grant is really the way to adjust that.

“If the Pell Grant is not high enough, Congress can raise it. If the income levels are not high enough, if you had to have higher income levels or lower income levels to get the full Pell or partial Pell, Congress can do that as well. I think the one thing that would be a mistake here would be to ask the taxpayers of America to now pay the loans off of other Americans who made those loans.

“The president is talking about the potential, at least the administration is, of forgiving up to $10,000 in student loans for everyone who has a student loan who makes less than $150,000. You know, a lot of Americans make less than $150,000. I think the median family income in America today is under $70,000. But, suddenly, for those that make under $150,000, we’d be giving them $10,000. And what did they get for that $10,000? They went to school. They got an education. They had choices they made as they did that, and we’ll talk about that in a minute, and also the legal problems here.

“You know, the president has said in the past that he didn’t think he had the legal authority to forgive these loans. The Speaker of the House has said in the past that she didn’t think the president had the legal authority to forgive these loans. And, by the way, there’s a way to get the legal authority—talk about that in a minute, too—coming to you and I with a proposal to give them the authority to do that.

“Even the New York Times Editorial Board says that loan forgiveness is, this is their quote, ‘legally dubious, economically unsound, politically fraught, and educationally problematic.’ Those are pretty good reasons not to do it. The best one would be the legally dubious one, and the president himself has thought that that was the case in the past.

“You know, 87% of Americans don’t have a student loan. The president is telling them, frankly, we’re going to forgive the loans for the 13% that the other 87% don’t have. People who decided not to go to college wouldn’t get that $10,000. Neither would those who avoided loans by attending a more affordable school, working harder part-time, doing the things that lots and lots of people have done to get through school.

“The same is true of people who have gotten out of school. And, as they’re paying off their loans, they’ve sacrificed vacations or better cars or bigger houses or other things to pay the student loan that they agreed to pay back when they took it. So the president’s plan disproportionately would benefit people who are in the upper income group.

“The top 40% of American households hold 60% of the student loans. The bottom 40% have less than 20% of the student loans. If you were going to talk about this at all, maybe you ought to talk about—maybe we should be talking about the bottom 40% of incomes, not the essentially the top 40% of incomes, which an across-the-board forgiveness of debt. And, by the way, that $150,000 would generally be in that higher percent.

“Student loan forgiveness under the president’s plan would largely benefit people who, frankly, you could argue, just don’t need it—need the benefit as well as many other American families and American individuals do.

“The Federal Reserve Bank of New York estimates that student loan forgiveness could be as much as $320 billion or $350 billion. That’s on top of the $100 billion that we already have cost the system by stepping back—maybe for too long—but certainly stepping back during COVID and telling people they didn’t have to make their loan payments.

“To put that in some perspective, that amount of money, $320 billion and another $100 billion, would fund the entire Pell Grant program for about a decade-and-a-half. So we ought to think about what we’re doing here, how we’re doing it.

“I think this plan would actually not drive college costs down. It would logically drive college costs up because colleges, just like students, would be told: when people make these loans, pay the school for the education they’re getting, there’s a good chance they won’t have to pay it back. And there’s a good chance we would have more income during this period of time, if—

“More likely that you’d have higher college costs, and you’d have people borrowing more money, and borrowing it quicker than they currently do because we’re actually would be setting the precedent that there’s a real chance you won’t have to pay this back. That’s not a good precedent to set.

“What Americans really need right now is relief from the crushing inflation we see, not more bad policies that put more money into the economy and drive inflation to an even greater height.

“President Biden has been bragging, frankly, about how strong our economy is and how low unemployment is. Well, if that’s true, why do we need to spend hundreds of billions of dollars on a program that’s unfair, that disproportionately helps upper-income Americans?

“It’s either, Madam President, it’s either the strongest job market since World War II, which the president said just recently, or he’s also said that this economy is the strongest economy we’ve ever had. It’s either that, or it’s an economy in such rough shape that people can’t pay their loans. Now it really can’t be both. And we’re sending all kinds of messages here we don’t need to send, and, frankly, I think the administration shouldn’t really want to send.

“People made a decision to invest in their education. They borrowed money to do it. The initial plan was that people would borrow money, and, as they paid it back, that money would be available for the next generation of people who wanted to borrow money. If that had worked out that way, we’d still be working off some of the first dollars that went into these student loan payments and student loan programs.

“If we say that this select, special group of people—who happened have the exact kind of data at this exact moment—don’t need to pay it back later, I think that’s the more logical thing that would happen. What if we say that this group doesn’t have to pay their debts, so maybe we should figure out other groups that shouldn’t have to pay their debt? If it’s a good economic policy not to pay your student debt, what if we decide we’re not going to pay people’s car loan debt? Or we’re not going to pay people’s mortgage debt? Or we’re not going to pay people’s credit card bills if they’re somehow out of control?

“There are ways to deal with that in the legal system, but government forgiveness is not one of them. The same arguments really apply to forgiving those debts as would apply to forgiving college debts.

“If the president thinks it’s a good idea, as I mentioned before, he could write a piece of legislation, hand it to one of his friends in the Congress, and let us work through the process. Let’s make the case as to why these debts should be forgiven. Let’s debate which other competing priority is less important than forgiving these debts.

“You know, we spent a lot of time acting like money is not money that you have to take from somewhere else to use for a current purpose. And I think we’re all realizing just how untrue that is. The president hasn’t sent that legislation up. In fact, the president, in his budget, didn’t even suggest that loan forgiveness should be part of his budget.

“It’s not in legislation. It’s not in the appropriations budget. It’s not a priority in anything the administration has put out there for us to debate and talk about. We just had a hearing this week with the Secretary of Education about the education budget request. There was nothing in that request about specific student loan proposals.

“I really hope that the administration will pause, will think about this, will understand the overall impact of effectively, suddenly, deciding we’re going to put $321 billion or so back into the economy that otherwise would be coming back into the Treasury as the debt repayment that those individuals have agreed to do.

“We’ve got ways to help people go to school. We’ve got ways to debate whether or not this is a good priority to forgive loans. But I take the president’s original position, which is the president doesn’t have the authority to do that. I agree with the Speaker of the House’s original position, that the president doesn’t have the authority to do this.

“If the president wants to make the case, let him make it right here. And it’d be a debate that I think would be worth having. And, I yield back.”

Ty AlbrightJune 17, 2022