In 2018, my wife and I attended new student orientation at Georgia State University.  At the time, the democrats were talking about student loan forgiveness.  So, after our student loan presentation from the university, I decided to fund some of my daughter’s college using student loans in case this comes true.  If not, then she will just have some debt to pay off.  I believe that if she had some skin in the game, then my daughter would value her education more.  If she ran into trouble, I, of course, will help.

Upon graduation, she ended up with a Bachelor’s degree and an amazing job right out of college.  She just has about $13k in student loans…not bad at all.

Now, Biden announces his plan to forgive almost all of her debt.  Paying close to language, he announced his plan.  This is different than announcing that it will happen.  I am not sure he has the power to do it on his own.  I would think Congress would need to be involved.  As a Dad with a child in debt, I am glad that her career will take off with little debt from school.  As a taxpayer and someone who pays his debts, I do not like this plan.

These students bought something, a college education.  It can be said that college is too expensive and unfair.  That may be true, but they bought the “service” anyway.  College costs are posted on university’s websites and there is no secret on the costs.  If the student failed to use their education,  then that is not my fault as a taxpayer.  If there is some major life event causing undue hardship, then that should be discussed as an exception…but it is not the norm.

The plan calls for folks making $125k or less can receive $10K in relief.  I know there is more to this plan, but this part applies to my family.  First, I feel the income threshold is too high.  Really, if you are making $80k, you should be able to pay $10k of low interest loans over time.  Really, any post-college job should be able to pay off a $10k low interest debt.  The repayment timeframe is basically unlimited.  If you made a bad decision on your major or post-graduation job, then that is not the tax payers’ fault.

This plan, announced in Aug 2022, is clearly to help the Democrats in the mid term election by buying the young vote.  If it wasn’t,  the program would have been announced on day one, since it was what Biden campaigned on. He enacted several plans such as cancelling the Keystone Pipeline when he became president, so, why not this plan.  Simple,  the pipeline decision is a negative and could cost him votes.  The financial aid plan would definately earn the party votes.  The Democrats hope that voters will forget the pipeline decision while keeping the financial aid plan top of mind just 2 months before the mid term.  The democrats are polling very poorly right now and need this as a boost.

Many feel this plan is unfair.  Those who pay cash for college, paid off their loans and those who never went to college are totally left out and forced to foot the bill for these students.  By the way, many  students made good decisions and can afford to pay off their loan.  Again, these students bought something and should pay it back.  The stories we hear on the news seem to revolve around interest rates.  One story mentioned a student who had about $130k in loans and they paid the minimum each month and the balance actually went up $8 at year-end.  Nobody mentioned that the $10k will not really help this person. So, if it is true that the issue is that students cannot pay off their loans because of the interest, then a better plan would be to just excuse the interest on the loans instead of gifting $10k-$20k per student.  This way, the student would just have to pay off what they borrowed.  The government can even make it retroactive so that payments so far can go to just pay off the borrowed balance.  This plan will still keep the student responsible for their decision, keep the folks who didn’t go to college from having to pay for someone who did and level the playing field for those who paid their loans or paid cash for school.  There is still a cost for this plan in the form of the cost of money and the difference between present value and future value of money, but it should be a far cry from the $300B-$500B price tag the news is throwing around.

Teach our students to be responsible for their decisions. To take credit for the good ones and to work on the not-so-good ones.