The Hill published on September 2, 2022 an article co-authored by my long-time colleague and good friend, Tom Vartanian, and me highly critical of President Biden’s recent decision to forgive hundreds of billion dollars in student loan debt without at least requiring some sort of public service in return. He acted alone without public debate or even a vote in Congress. His action represents a huge acceleration of a long-term trend of destroying any semblance of marketplace discipline so critical to a successful free-market economy. And it is grossly unfair to millions of citizens who have already paid off their student loans, millions more who never sought student loans, and even more who chose not to attend college. I urge you to read the article, a link to which is below:
President’s Biden’s forgiveness of up to $20,000 of the amounts owed on 45 million outstanding student loans represents the official death knell of any semblance of market discipline in America. Unfortunately, his administration has not been alone in giving away taxpayer money without attaching strings to ensure that everyone has some skin in the game.
Higher education is a good thing, and the more well-educated people we have, and the better educated they are, the better it is for the nation. But there are much better ways to achieve those goals than by using taxpayer money in undisciplined ways that distort the incentives underlying financial markets.
Government subsidies abound, and it may indeed be in the public interest from time to time to accept the moral hazard that accompanies a massive taxpayer-funded bailout when the benefit outweighs the moral hazard created. But this delicate balance increasingly seems to be relying on political expediency rather than financial reality.