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Large federal spending and welfare programs have traditionally been leveraged by Democrats in Washington for political advantage. Nonetheless, President Joe Biden’s approach to purchasing goodwill via the unilateral cancellation of student loan debt is unprecedented in American history.
Removing the burden of student loan debt was previously regarded as a far-left policy, primarily championed by progressives and Senator Bernie Sanders. However, since Biden’s 2020 election, he has pursued this policy through executive action. He initially justified this through the ongoing financial pressures being experienced by Americans due to the COVID-19 pandemic.
Although former President Donald Trump temporarily suspended student loan repayment during the pandemic, Biden significantly extended this period, resulting in an influx of cash into the American economy and subsequent inflation. However, this attempt was halted by the Supreme Court following a lawsuit filed by Nebraska’s attorney general, among others.
Despite this, Biden is now attempting a new approach to cancel student debt under the “SAVE Plan”. His administration has been swift to act, with the Department of Education announcing the removal of $7.4 billion in student debt under this new scheme, followed by an additional $6.1 billion.
The state of Nebraska has responded to Biden’s renewed efforts by launching another lawsuit to stop the administration bypassing the Supreme Court ruling. Moreover, alongside executive orders for debt cancellation, Biden’s administration appears to be making it more challenging for student loan contractors to secure payback.
There are concerns that this strategy of demonizing loan servicers is part of a larger plan to ultimately enact massive loan forgiveness and actively discourage repayment. However, critics argue that unilateral student loan forgiveness is a flawed policy. It is considered unfair to those without a degree or those who have already repaid their loans and could further fuel inflation. Furthermore, there is the possibility of creating a precedent that could lead the far left to demand more debt forgiveness.
There is a growing call for a return to principled fiscal policy that promotes personal financial responsibility, which is integral to the health and success of America’s free enterprise system.
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