Opinion | No Student Loan Borrower Left Behind

Opinion | No Student Loan Borrower Left Behind

Journal Editorial Report: Paul Gigot interviews Purdue University President Mitch Daniels. Image: Shawn Thew/Shutterstock

One sign that President Biden’s student-loan cancellation isn’t playing well politically is the push by Democratic Senators to extend the write-off to parents who borrowed to pay for college for their children.

Congress created the Parent PLUS loan program in 1980 to help middle-class families. Undergraduate federal loans for dependent students are capped at $31,000, but parents can borrow an unlimited amount to cover the gap between what colleges charge and their children receive in financial aid. About 3.6 million parental borrowers owe the government some $107 billion.

Parent PLUS loans carry higher interest rates than student loans but default rates are also much lower. One reason is the federal government performs credit checks in the application process. Novel concept, we know.

Democrats have apparently realized that canceling debt for young people who don’t want to repay isn’t fair for the millions of parents diligently making payments. Under the President’s plan, parent borrowers can get up to $10,000 in forgiveness. But eight Democratic Senators led by Maryland’s

Chris Van Hollen

are beseeching the President to forgive more.

“Without addressing this group of borrowers, any improvements to these programs will fall short in adequately addressing the multigenerational student loan debt crisis many families are facing,” the Senators wrote to Mr. Biden last week. They want parents to receive an additional $10,000 in forgiveness if their child received a Pell grant.

Democrats also want to extend the new more generous income-based repayment plans that cap monthly payments at 5% of their discretionary income (down from 10% today) to parents and make it easier for parents participate in a special public-service loan forgiveness program.

Who knows how much this parental payoff would add to the up to $1 trillion cost of student-loan forgiveness, but it wouldn’t be cheap. Once government starts forgiving loans for political reasons, there’s no limiting principle, and Democrats will keep demanding more.

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the September 21, 2022, print edition.

Source link

Leave a Comment

Your email address will not be published.