Discussion of the plight of student loan debt has been in the news several times lately. A reader challenged me for a solution.
Rogue Executive Actions
Biden is already bending to the wishes of Elizabeth Warren and Bernie Sanders to want to forgive student loans.
On Monday, Senate Minority Leader Chuck Schumer announced Biden ‘Considering’ Forgiving $50,000 in Student Loan Debt via Executive Action.
Schumer held a press conference alongside Democratic Congressmen-elect Ritchie Torres, Mondaire Jones and Jamaal Bowman of New York, during which the group announced they have “come to the conclusion” that Biden can “forgive $50,000 of debt the first day he becomes president.”
“You don’t need Congress, all you need is the flick of a pen and President-elect Biden — then President Biden — can make this happen,” Schumer said.
Asked if Biden will have the executive authority to forgive the debt, the New York Senator said the president-elect is researching that and “I believe when he does his research, he will find that he does.”
Huge Moral Hazard
I discussed the moral hazard of student loan cancellation in Another Good Reason for No Student Loan Bailout
Debt discharge is a huge moral hazard that encourages more overpaying for useless degrees.
It will do nothing to address the cost of higher education.
We need more competition, more accredited schools, more alternatives, and less public union graft.
Forgiving debt fosters less competition and more graft and does nothing to fix any fundamental issues.
End collective bargaining of all public unions. That is the source of numerous problems.
Cut coaches and administrator salaries
Add competition via more alternative education programs. The teachers’ unions fight this idea, and it’s certainly not for the kids.
Pass national bankruptcy reform. Let cities, municipalities, and local government bodies go bankrupt. That is the first step needed for pension reform. Some states, including Illinois, do not allow municipal bankruptcies.
Modify the bankruptcy reform act of 2005 to include a means test based on employment and job salaries to allow some students to discharge debt in bankruptcies.
Do it For the Kids
The pension crisis, bankruptcy reform, escalating administrator and coach salaries, and collective bargaining all need to be fixed. Until they are, bailouts are nothing but a big moral hazard.
Do something for the kids instead of the teachers, administrators, and pension funds.
- Illinois Is Ground Zero for the Pension Crisis
- Illinois is Insolvent: State Requests a Pension Bailout From Congress
- Democrats, Here’s Your Chance to Get Rid of Bad Police
Article number 3 discusses the role of public unions in this mess. Even Franklin D. Roosevelt understood the inherent problems and massive conflicts of interest in public unions.
A good first step to fixing the education problem would be to end collective bargaining of public unions, bankruptcy reform, and pension reform.
How about doing something for the kids instead of the teachers, unions, administrators, and pension fund operators?