The Biden administration has been suggesting for several months that it will soon announce plans to pay off a significant amount of student loan debt for the more than 40 million Americans with federal college loans.

Beset by multiple crises and abysmal poll numbers, the administration is likely to delay the announcement until closer to the fall election, hoping it will boost turnout among students and recent college graduates and help Democrats avoid the political armageddon. Whether this expectation is realistic, given the current level of inflation, which may soon send many Gen Zers back to their parents’ basements, is debatable, so I’ll leave that speculation to others.

More important are several other considerations, such as the following: Loan forgiveness is likely to be illegal, immoral, and inequitable, would undermine already shaky government finances, and makes little sense.

Before I go into more detail, it’s important to note that, since March 2020, the Biden administration has imposed a moratorium on interest charges on approximately $1.6 trillion in student loan debt and essentially told borrowers that there are no financial consequences for not making regular payments, even as employers struggle to fill more than 11 million available jobs. Not only that, as a result of inflation, the cost of paying off existing loans has gone down; a dollar borrowed a year ago can be repaid today with a dollar worth less than 92 cents in real terms. In addition, a large number of other borrowers, such as those with loans from the defunct Corinthian Colleges, have been told that their debt has been canceled in full.


So it’s not like tens of millions of college students and recent graduates have to choose between paying off their student loans and eating. That is not the case at all.

My other concerns, however, are real.

It may be illegal.

I am not a lawyer, but it seems incomprehensible that debt cancellation is considered legal if challenged in court. The current federal Direct Loan program was created by an act of Congress (Public Law 111-152) and signed into law by President Obama. There is no provision in the legislation that explicitly gives the president broad latitude to change the program, for example, by eliminating loan payments. To assume such unilateral authority, the president would be acting in the manner of King Louis XIV (“I am the State”) rather than the head of a government guided by the rule of law.

It is immoral and unfair.

Is it morally right to tell some borrowers, “You must pay off your loan at X percent interest rate,” while telling other borrowers, “You’re free”? Doing so seems especially wrong when many who pay their loans will be living frugally to do so, while many who are told to ignore their obligations (think lawyers, MBAs, and other well-paid professionals) are already living comfortably. Is this the new definition of fair? Does modern American society reward those who ignore their legal obligations?

It is financially irresponsible.

My rough estimate is that the moratorium on student loan interest payments in just the 28 months since it began has reduced federal revenue by more than $200 billion. This, at a time when the federal debt exceeds $30.5 billion. Even a modest student loan forgiveness program would likely involve $400 billion to $500 billion in additional lost government revenue. Someone, someday, will have to pay these debts unless some future administration decides to default on government obligations or, perhaps more likely, reduce their magnitude through deliberate inflation, as I alluded to earlier.


It makes little sense.

Does it make sense to charge hundreds of millions of Americans living paycheck to paycheck, many of whom never had the chance to go to college (or chose not to), to bail out student borrowers, many of whom doing pretty well financially, some with six-figure incomes? Is it sensible to subsidize higher education, which has been rising in cost for decades and fails to graduate most applicants to a bachelor’s degree in six years? I don’t know about you, but not me.


It’s not about helping students. So why would the administration do this?

A very plausible answer: Higher education is a fervent ally of progressive elements within the Democratic Party, providing considerable financial support, ideas, and personnel. Thus, it is a way for the administration to buy votes while paying its loyal supporters in the academic and activist communities.

Richard Vedder is a senior fellow at the Independent Institute in Oakland, California, a distinguished professor of economics emeritus at Ohio University, and the author, most recently, of Restoring the Promise: Higher Education in America.