November 17, 2022

Smith, Foxx Demand Answers on Biden’s Student Loan Giveaway to the Wealthy

WASHINGTON, D.C. – Following a court decision that struck down the Biden Administration’s executive order on student loans, House Budget Committee Republican Leader Jason Smith (MO-08) and House Education and Labor Committee Republican Leader Virginia Foxx (NC-05) demanded answers from the Biden Administration over its student loan giveaway to the wealthy in a letter sent to White House Office of Management and Budget (OMB) Director Shalanda Young. The ranking members ordered the agency to preserve all documents and correspondence related to President Biden’s executive order earlier this year that overhauled the federal student loan program at an estimated cost to taxpayers of more than $1 trillion.
In the letter, Smith and Foxx note that cost estimates of President Biden’s executive action on student loans include $400 billion for student loan cancellation, $105 billion for the loan repayment moratorium, and $450 billion for an expanded income-driven repayment (IDR) plan. President Biden’s executive action not only shifts the debt burden from wealthy borrowers to working class families, but also would cost approximately $2,500 per taxpayer.
“The Congressional Budget Office (CBO) recently estimated the President’s loan cancellation policy alone will cost taxpayers over $400 billion, while his five unwarranted extensions of the repayment pause have increased the deficit by $105 billion to date. When those two actions are combined with the President’s new IDR proposal, it is quite possible this administration will have spent over $1 trillion during their first two years in office on the student loan program alone…The burden of student loan debt cannot be cancelled: it can only be shifted from Americans who willingly took out student loans to those who did not. Forcing the average taxpayer to foot at least a $2,500 bill for wealthy Americans’ degrees is unfair and does nothing to lower the cost of college tuition for working families. Taxpayers deserve to know if the Biden Administration took this into account when making its unilateral decisions.”

- Excerpt from letter by House Budget Committee Republican Leader Smith and House Education and Labor Committee Republican Leader Foxx
Smith and Foxx demanded OMB provide a full accounting of President Biden’s student loan cancellation, including the inflationary impact of the roughly $1 trillion in new spending, the cost estimate of each facet of student loan cancellation, and which income groups benefit the most. They also ask the agency to furnish what arguments the Biden Administration relied upon to justify bypassing Congress through an executive order to significantly rewrite the federal government’s student loan policy, which a federal judge recently struck down as unconstitutional. The request comes atop a Government Accountability Office (GAO) report from earlier this year which found that the U.S. Department of Education significantly underestimated the cost of the federal student loan program by $311 billion.
Student Loan Cancellation Cost Exceeds $1 Trillion President Biden has added over $1 trillion in new inflationary spending with benefits targeted at Americans with higher lifetime earnings, all without Congressional approval:
  • $400 billion: student loan cancellation
  • $105 billion: repayment pause extension
  • $450 billion: expanded income-driven repayment plan
  • FACT SHEET: Biden’s Executive Spending
Student Loan Cancellation is a Giveaway to the Wealthy
  • 87% of adults without student loans will be forced to pay for the 13% of adults who chose to take on loans.
  • 70% of the benefit from canceling student loan debt will go to those in the top half of the income spectrum.
  • 56% of all student loan debt is owed by the 14.3% of individuals with advanced degrees.
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