The Latest Student-Loan Charade

Having induced $1 trillion in debt, Democrats now want to write it off.

WSJ Editorial. Excerpts:

"Pay As You Earn program. This gift from taxpayers caps monthly student-loan payments at 10% of a borrower's discretionary income, regardless of how much the borrower owes. Even better, the borrowers have their debts entirely forgiven after 20 years—or merely 10 years if they work in government or nonprofits."

"The program used to be closed to people who borrowed before October 2007, or who have not borrowed since October 2011, but now Mr. Obama is by regulatory fiat opening the giveaway to older borrowers too.

And whereas the White House budget said expanding Pay As You Earn would cost more than $7 billion in the first year, White House domestic policy director Cecelia Munoz said Monday on MSNBC that expanding the program will now save money."

"Elizabeth Warren's bill to allow borrowers to refinance their old federal or private loans into new government loans at lower rates.

The Congressional Budget Office says the Warren bill would increase federal spending by $58 billion over a decade. But as CBO has repeatedly warned, its official scores by law must underrate the risk of defaults in such federal loan programs, so who knows what this latest election-year pander to young voters will ultimately cost. 

Ms. Warren aims to pay for the new spending with one more tax increase—in this case the " Buffett Rule," which seeks to make Americans earning more than $1 million in income pay at least 30% of it to the IRS. Never mind their legal deductions or charitable contributions."

"the common political secret of the Obama and Warren proposals—they aren't aimed at aspiring college students hoping to matriculate but rather at former undergrads who are now suffering the economic hangover from Mr. Obama's previous policies."

"student debt outstanding has nearly doubled since 2007 to more than $1 trillion."

"among recent college graduates age 22-27, a full 45% were underemployed in 2013,"

"when the cost of defaults and debt forgiveness finally comes due, it will be paid by all taxpayers, including those who didn't go to college."