Cato Experts Weigh in on Another Student Debt Cancelation Plan

This morning the Biden Administration released yet another student debt cancelation plan. The proposed rule is President Joe Biden’s third attempt at student loan cancellation as he faces repeated legal challenges from Republican states. His first plan was rejected by the Supreme Court last year, and his second plan has been temporarily halted by a federal judge in Missouri.

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Neal P. McCluskey, Ph.D. is the Director, Center for Educational Freedom at Cato Institute. Andrew Gillen is a research fellow at the Cato Institute’s Center for Educational Freedom. They offered the below perspective on this development.

“The Biden-Harris administration has announced yet another plan to forgive student loans by shifting the responsibility for repayment from the student to taxpayers. Past plans have run into enormous constitutional and legal challenges, and this plan is likely to as well. The most notable feature of this plan involves the Department of Education proactively forgiving debt for borrowers that it predicts will default on their student loans. But that just raises the question, if the Department can predict which loans will default, why are they making those loans in the first place? In any other context, making loans that have a high probability of never being repaid is called predatory lending.”

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