Debate Regarding Forgiveness of Student Loan Debt | Citrus North

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Since the beginning of his term, Vice President Joe Biden has been subjected to pressure from activists as well as many of his fellow Democrats to take action to lessen the financial strain that students are under as a result of their student debt. For example, a coalition of 105 organizations urged that the government unilaterally forgive the majority or all of the more than $1.6 trillion in outstanding student loans. They believe that doing so might provide students with the opportunity to build money, save for retirement, and begin families.

Is it within the president’s power to make a public statement stating that the obligations incurred by the government as a result of these Citrus North Loans arrangements have been satisfied? If the answer is yes, then the question becomes whether or not it would provide the beneficial advantages that are envisioned by those who support it. And what potential drawbacks may a strategy like this have?

Andrew Gillen invested a significant amount of time and effort during the course of recent research that was carried out by The Texas Public Policy Foundation to conduct an analysis of the reasons both for and against the proposition. The aspect of Gillen’s style that is most appealing is that he avoids the practice of presenting “strawman” versions of arguments in favor of loan forgiveness. This phrase means that he has formulated weak versions of the arguments that are easily demolished, and this is the most appealing aspect of Gillen’s style. In contrast, Gillen is adamant about doing the exact opposite of what was discussed. Gillen’s “steelman’s” argument for debt forgiveness, means that he concentrates on the most enlightened interpretations of the case offering the most effective advocates. This indicates that he is advocating for the forgiveness of student loans.

Let’s all have a look at whether or not this cancellation is in accordance with the law. It makes no sense to address the matter in any greater depth if President Obama does not have the power to make it happen, thus this should be the first item that is spoken about.

According to the Higher Education Act of 1965, the secretary of Education (and, consequently, probably his supervisor, the president) has the authority to “modify the terms of, compromise or waive any rights,” which includes the right or equity of redemption. This gives rise to the notion that the president is able to exercise the power to make decisions. The proponents of debt forgiveness leap to the conclusion that the phrasing of the statute gives the impression that the president has the authority to halt payments on student loans since it “waives” the government’s right to be repaid for the money it has already loaned out.

Gillen argues that the phrasing is not meant to indicate an authorization for the general cancellation of debts and references the remaining portion of the paragraph that was cited. According to the provisions of the section, the Secretary of Education has the authority to “change the conditions of the waiver, modification,” etc. only “with respect to the responsibilities as well as the authorities and obligations entrusted to him under this paragraph…..” This suggests that the Secretary may only forego the payment within the confines of debt forgiveness schemes that have been legislated by Congress. In most cases, the Secretary of Education does not have the authority to cancel or waive existing student debts.

In addition, in contrast to the executive branch, the Constitution grants Congress the power to make payments on behalf of the government. There is no indication that his authority is to waive the right of the government to accept payments within Article II, which establishes the powers and duties that the president (and the subordinates) There is no indication that there is any indication that his authority is to waive the right of the government to accept payments.

In addition, the courts have not been opposed to supporting the claims of imposing authority that the administration of Vice President Joe Biden has made. The rent ban that was enforced by the Centers for Disease Control and Prevention (CDC) was ruled illegal by the Supreme Court of the United States in the previous year. It may be tough to repay student loan obligations; but, it will be much more demanding for the students who are compelled to discover that their loans have been canceled, only to have them returned when the courts rule that the president does not have the jurisdiction to make judgments.

What exactly are the ethical justifications for canceling debts? The cancellation, according to Senator Bernie Sanders, one of the most prominent advocates for loan forgiveness, “puts a stop to this farce tying the whole generation to the weight of a lifetime of debt due to the crime of earning a college degree.” A significant number of students were led to believe, incorrectly, that the program for which they took out loans would be more successful than it really was. Why shouldn’t the government show some compassion and assist in easing the load that these kids are carrying?

Gillen is the first person to bring to everyone’s attention the fact that the vast majority of students do not have to worry about the burden of college debt. A smaller percentage of students do not graduate with any student loan debt; these students often attend universities that are within their financial means and do not need them to take out loans. For those who do find themselves in a position where they have to take out loans, the vast majority of them have affordable monthly payments, and more than 80 percent of them pay back their debts in a period of no more than 14 years. In view of these considerations, allowing students the responsibility to pay their loans across the board is not a moral basis to do so.

Some proponents of debt forgiveness have used distributional arguments, saying that the forgiveness would assist bridge the wealth gap between black and white people since black students have greater difficulties than white students in repaying their loans. The data provide credence to this argument; nonetheless, Gillen contends that collective redistribution for the sake of a group’s own self-interest is not only a lousy notion but also raises questions about its legality. In the United States, the Fourteenth Amendment guarantees that everyone will get “equal protection of the law,” and the Supreme Court has declared that practices that are meant to favor particular racial groups over others do not comply with the law and are thus not allowed. Therefore, the argument that is based on the idea of wealth redistribution cannot be considered acceptable.

In addition, the portion of the debate that supports the cancellation of consumer debt argues that the program might be good for the economy. This is due to the fact that debtors would be able to spend the money that they would have previously given to Treasury officials at the United States Treasury. It is expected that the increased buying power would contribute to the expansion of the economy. Gillen, on the other hand, is not persuaded by this concept. To make up for the reduction in income that would result from the debt forgiveness program, the federal government would have to take on more debt in order to meet its financial obligations. According to him, this is not a smart idea since “greater deficits now would entail larger taxes in the future and might limit the future development of the economy.” This is one of his main points.

Because it is true that the United States is currently suffering significant inflation, I would want to add that adding more buying power would not enhance output; rather, it will simply result in higher prices. This is an addition to the point that Gillen presented.

Gillen mentions various negative aspects of writing off debt through canceling loans in her assessment of the topic.

In the first place, it will encourage students in the near future to take out further loans in the expectation that politicians would be just as generous with them as they were with previous generations. Economists use the term “moral risk” to refer to the propensity to engage in hazardous behavior when there is the possibility that the consequences of such behavior will be shouldered by another party. Even if students who are already in debt get their loans erased, Gillen believes that moral hazard might encourage students to borrow more money than necessary in order to finance their education.

In the study titled “The Economic Effects of Student Loan Cancellation,” which was carried out in 2018 for the Levy Institute, a number of academics who advocate for the cancellation of student loans recognize this point. Their approach to the problem of moral hazard is to combine the cancellation of student debt with the implementation of a program that would make higher education either “free or no debt for all students. This would imply that the cancellation of student debt, in general, is only a stepping stone on the progressives’ path toward their ultimate aim, which is to elevate the attainment of a college degree to the status of a privilege.

“No cost universities” or not The argument that cancellation of loans would create a moral hazard situation is a compelling one. Students are encouraged to take out loans and spend frivolously, which results in additional costs for taxpayers.

In addition, if we make the decision to cancel or eliminate existing student debt, it is quite possible that educational institutions would raise their prices. According to Gillen, “If students are not compelled to pay the debt that finances the many businesses and the fundamental restrictions to tuition—parent, and student desire to pay,” then tuition costs would be much lower. This would exacerbate the fundamental problem that student assistance was supposed to address, which is the high cost of attending college.

Others who are among the most successful in the country who have taken out significant amounts of student loan debt to pursue professional degrees like medicine and law, as well as people who have high incomes, would benefit from a program that forgives student debt. If students didn’t have to repay their student loans after graduation, there would be an inexplicable widening in the wealth gap between those who are doing well financially and those who are suffering. However, eliminating student loans will only make the income gap worse, despite the fact that progressives often gripe about it.

The cancellation of student debts is a bad proposal that is politically motivated and driven by politics. In response to this proposition, I would like to urge that we give some thought to unraveling the Gordian Knot, which would involve, in effect, doing away with government assistance programs for students. It is time for the United States Congress to draft legislation saying that the government loan program to higher education institutions would be terminated at an unspecified date (possibly within the next five years). Because of this, educational institutions and students will have more time to go back to the way things were in the United States before 1965. It is not the responsibility of the federal government to solve the issue of financing higher education; rather, this is the responsibility of private lenders and families.

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