Four Reasons Why the Student Loan “Forgiveness” Program Harms National Security  

Monday’s announcement by the Congressional Budget Office that President Biden’s student loan ‘forgiveness’ program will cost a whopping $400 billion has left many commentators aghast. Curious as to how this will harm national security?

Consider this: in the midst of one of the worst recruiting years in the history of the All-Volunteer Force (AVF), the commander-in-chief instituted a student loan ‘forgiveness’ program that will predictably undermine the AVF’s viability by disincentivizing military service to the detriment of America’s security.

Furthermore, the program will also harm national security by draining needed resources away from defense and institutionalizing a troubling expansion of unilateral presidential authority. 

Finally, it creates a mindset that erodes the quintessential American virtues of self-reliance and altruism and, more importantly, wrongly suggests that freedom is free. 

Nature of the Program

According to the White House, here’s what President Biden’s program will do:

“The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples).”

Here are four key reasons this program harms national security:

1)  A disincentive for military service

This program undercuts one of the most important incentive programs related to military service.  Writing in 2016, Benjamin Luxenberg points out:

“Many of those who join the military do so, at least in part, to obtain access to the G.I. Bill and the financial means to obtain a degree.  According to a 2011 Pew Research Survey, 75 percent of those who enlisted said they did so to obtain educational benefits.  That statistic has risen from the pre-9/11 era when it was just 55 percent — likely because college has become that much more expensive!  As of 2014, 48 percent of Iraq and Afghanistan veterans utilized the G.I. Bill, with 59 percent of female veterans doing so (a demographic the military wants to see grow in its ranks).”  (Emphasis added.)

It is correct that – for the moment – the new program applies only to loans prior to June 30th. Additionally, it may be that the G.I. Bill still provides more benefits than the Biden program, but it is also indisputably true that the program erodes the value of the G.I. Bill. Worse, it creates a belief that the government will, sooner or later, provide free or almost free education without requiring anything in return.  In fact, there are already calls to expand the program, and a senator is now insisting that it is “only a first step.”

The loan ‘forgiveness’ program is manifestly unfair to many Americans. In an August 25th editorial, (Forgiving Student Loans is a Costly Mistake”) the Washington Post contended:

“[S]tudent-loan forgiveness of any kind is highly regressive, benefiting those who graduated college at the expense of the roughly 60% of Americans who didn’t. An analysis released on Tuesday found that roughly 42% of the benefits of student loan forgiveness would go to the wealthiest two-fifths of Americans, with the bottom fifth receiving just 12%.”  (Emphasis added). 

In a stinging op-ed in the Washington Post, columnist Marc Thiessen charged:

“Biden wants blue-collar workers who did not attend college to subsidize the higher education of white-collar professionals.  Under his plan, hospital cafeteria workers will pay for the loans of doctors and nurses; elementary school janitors will pay for the loans of well-to-do parents; auto mechanics will cover the loans of customers whose luxury cars they fix.  It is a reverse-Robin Hood plan that steals from the poor to give to the rich.” 

In my view, it is especially unfair to those who serve–and have served–in the military, particularly for the enlisted force.  Consider this: enlisted soldiers on average make around $34,000 a year, and yet, despite having what experts consider to be the most stressful job in America, they will be paying the taxes for loan ‘forgiveness’ benefiting people who not only are earning almost four times as much ($125,000), but who are also not being asked to do anything for their country, let alone risk their lives.

And don’t think the program is a panacea for Black students.  Here’s what Jerusalem Demsas, an Atlantic Magazine writer, found last April:

“Black Americans are on average poorer than white Americans, and the latter is likely because of labor-market discrimination, neither of which is addressed by student-loan cancellation. Student-debt cancellation does not actually change anything about labor-market discrimination or credit-market discrimination or discrimination within institutions of higher education, nor does it address the rising cost of college.

Demas adds:

“What’s more, the majority of all student-loan debt is held by white borrowers, and, according to the Pew Research Center, just 23 percent of Black Americans older than 24 had a college degree in 2019.  The large majority of the Black population would not be directly served by student-loan forgiveness.”

Some lawmakers have recognized the damage the loan ‘forgiveness’ program will do to recruiting, and have sent a letter to the President expressing their concerns.  One congressman noted the painfully obvious: the “armed services have often used educational benefits as a top incentive in the recruitment process, and now that is gone.”  Another, an Air Force veteran, put it this way:

“For decades, hundreds of thousands of young Americans have made the courageous decision to serve in uniform based on the promise of a college education… I’m very concerned that the deeply flawed and unfair policy of blanket student loan forgiveness will also weaken our most powerful recruiting tool at the precise moment we are experiencing a crisis in military recruiting.”

In short, this program pulls the rug out from under military recruitment efforts at one of the most difficult times in the AVF’s history, and it does so in a way that is especially unfair to those who served or are still serving.

(2)  The costly program will drain resources desperately needed for our defense and for that of our allies 

Though I think it would hardly need to be said, but recent events – the Russia-Ukraine war, tensions with China over Taiwan, instability in Iran, and saber-rattling in North Korea – have made it very obvious that America will need to spend more on national security.  Some things are that simple.

Last May, defense budget expert Mackenzie Eaglen wrote it’s “clear that the White House’s budget of $773 billion for the US military does not provide the growth above inflation necessary to simultaneously keep pace with rising personnel costs, modernization priorities, and general warfighting readiness.”  The right number?  Eaglen estimated $846 billion.

Since that report in May, the sharp rise in inflation has played havoc with the Pentagon budget.  Two weeks ago the National Defense Industrial Association advised:

“Actual inflation has exceeded what was expected (and budgeted for) by almost 9 percentage points since inflation began to rise in January 2021. From Fiscal Years (FY) 2021 to 2023, the total loss of buying power from this unexpected inflation will exceed $110 billion dollars. This loss comes at a challenging time as DoD races to make up for lost ground in maintaining overmatch against near peer competitors supported by a Defense Industrial Base (DIB) still suffering from COVID-19, supply chain, and workforce challenges. (Emphasis added).

Let’s also not forget the expense of all the aid provided Ukraine.  Journalist Alice Speri said this a little more than two weeks ago:

“Since Russia’s unprovoked invasion of Ukraine in February, the U.S. government has pumped more money and weapons into supporting the Ukrainian military than it sent in 2020 to Afghanistan, Israel, and Egypt combined — surpassing in a matter of months three of the largest recipients of U.S. military aid in history”

Speri also says this:

“Because the assistance is drawn from a variety of sources — and because it’s not always easy to distinguish between aid that’s been authorized, pledged, or delivered —some analysts estimate the true figure of the U.S. commitment to Ukraine is much higher: up to $40 billion in security assistance, or $110 million a day over the last year.”

In fact, experts advise thatthe U.S. and Europe are running out of weapons to send to Ukraine.”  Consequently, to replenish America’s arsenals, the arms industry (which has shrunk to just 1% of the economy) will have to be ramped up – a clearly costly but essential investment.  Thomas G. Mahnkent of the Center for Strategic and Budgetary Assessments warned last April that “the requirement for greater investment in munitions is a recurring finding of wargames and strategic choices exercises…[t]he current U.S. munitions production base lacks capacity, and manufacturing methods are not always tailored to the needs of 21st century warfare.”

In assessing the impact of the student loan giveaway on budget resources available for defense, consider that the CBO’s $400 billion estimate for the cost of the loan handout is actually on the low side.  Others have estimated even higher: the Committee for a Responsible Federal Budget (CRFB) says that the program “will cost between $440 billion and $600 billion over the next ten years, with a central estimate of roughly $500 billion.

In addition, CRFB says that the “changes announced [in the program] will likely cost more than double the amount saved through the recently passed Inflation Reduction Act, completely eliminating any disinflationary benefit from the bill.”  An even grimmer estimate is reported by Business Insider: “President Joe Biden’s plans to forgive student loans could cost more than $1 trillion, according to estimates by the Penn Wharton Budget Model.” (Emphasis added).

The Biden Administration says more than 40 million borrowers are eligible to take advantage of its loan ‘forgiveness’ plan.  Consider, however, that America’s armed forces are are tasked  with defending a U.S. population of some 335,337,517 people (and, including our allies, the U.S. military is obliged to defend about a quarter of humanity).

To look at it another way, it is estimated we will be spending an estimated $400 billion (and up to $1 trillion) to decrease the debt of less than 15% of the population.  It will give them an amount which is more than half the entire current defense budget that protects all Americans – as well as our friends and allies.

Experts tell us the program is a bad idea.  For example, National Public Radio points out that in a rare case of bipartisanship, many economists from both the left and the right agree that this proposed policy has… not-so-good side effects.”  Harvard economist Lawrence Summer says:

“It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college.  It will also tend to be inflationary by raising tuitions…Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college.”

Given that the program erodes the attractiveness of the military’s educational benefits, lawmakers have rightly posed this question to the President: What is the Administration’s plan to develop incentives to augment of the loss of those who might join the military to help pay off student loans?  It seems inarguable that to compensate for the erosion of the educational incentive to join the military, costly new inducements will have to be created and added to the budget.

The point is this: how on earth can we fund the necessary national defense with a budget saddled with as much as $1 trillion in giveaway expenditures?

(3)  The program is a worrisome expansion of presidential emergency power

You may be surprised to learn there is no specific statutory authority for Biden’s program.  In 2021 the Speaker of the House Nancy Pelosi was reported (accurately) as saying this:

“People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”

So what then is alleged as the legal authority?  The Justice Department’s Office of Legal Counsel (OLC) obligingly produced a legal opinion (here) to cover what will be – absent Congress or the courts acting – a vast expenditure of taxpayer money.

OLC argues that a provision of the 2003 Heroes Act permits the President to direct the Secretary of Education to “waive or modify any statutory or regulatory provision applicable to the federal student loan program” if it is “necessary in connection with a war or other military operation or national emergency.”

So what “national emergency” does OLC rely upon?  The COVID-19 pandemic.  Ironically, the President undercut that rationale by declaring on a national television program on September 18 that the pandemic was over.”

Importantly, this is yet another worrisome expansion of Presidential executive power. In an excellent Washington Post op-ed (“Biden used ‘emergency powers’ to forgive student debt? That’s a slippery slope), Elizabeth Goitien from the Brennan Center for Justice highlights Biden’s dubious use of emergency powers.

Focusing on the core of these sweeping emergency powers, Goitien emphasizes that emergency powers are not meant to be used to address long-term policy issues.  Rather, she says, “[t]heir purpose is to give presidents a short-term boost in power to handle a sudden, unforeseen crisis (the definition of “emergency”) that is moving too quickly or unpredictably for Congress to address.”

To reiterate, emergency powers were created for emergencies.  They are not meant as a backdoor loophole for the President to use at his or her will to create programs that are really the province of Congress.  Because the student loan issue is not in the emergency context, Goitien confirms that the emergency powers are not the answer:

‘For one thing, when it comes to long-term policy problems, they are rarely adequate substitutes for congressional action. Biden cannot use emergency powers to forgive certain private student loan debts or debts incurred after the covid-19 emergency declaration lapses. Absent broader legislation, student loan debt will likely remain a significant problem for millions. On this and other issues, there are no shortcuts around the hard work of fixing our dysfunctional legislature.”

Yes, emergency powers are critical to national security when used for a proper purpose during a crisis.  However, do we really want the President to be able spend $1 trillion without explicit approval from Congress simply by claiming it is connected to a “national emergency?”

More importantly, will Congress and/or the courts react to this obvious example of executive overreach by significantly curtailing appropriate emergency authorities…to include some we might need in the future?

(4) The program damages the American spirit

I am concerned about the damage this kind of giveaway will do to the American spirit.  In his inaugural address, President Kennedy famously challenged all Americans: “Ask not what your country can do for you—ask what you can do for your country.”  Unfortunately, by wiping out student loans without linking it to any service to the nation turns Kennedy’s admonition on its head.

Columnist Marc Thiessen argues:

“Biden is using a law designed for active-duty service men and women as a pretext to provide loan forgiveness for those who never wore the uniform. Indeed, he is giving students who did not serve broader benefits than those who did. In so doing, he is effectively turning an entire generation of Americans into military impostors — receiving the benefits of military service they did not render…The bill is called the Heroes Act for a reason. Americans who take out loans they can’t afford to repay are not heroes — and should not be treated as if they were.”

My own view is that the Heroes Act was not intended solely for military personnel, but Thiessen is correct in saying that “[i]n 2007, when Congress made the Heroes Act permanent, it explicitly reiterated that it was acting to address ‘the unique situations that active duty military personnel and other affected individuals may face.’” (Emphasis added).

In other words, Congress intended there to be a connection with a “unique situation” which, as Elizabeth Goitien and others note, is not the circumstance with respect to student loans.

Moreover, I believe this handout tends to reinforce the disturbing notion that seems to be emerging in this country about the sacrifice freedom actually requires.  Along this line, it says a lot to me that a Cato poll shows that Americans (64%) support the loan program – but only if it doesn’t cost them anything.  However, if it raises taxes (as I think will surely be the case) 64% would oppose it.

In my opinion, the Quinnipiac University poll from last March is a troubling indication that many young people do think that “freedom is free” – and in more than just the financial sense.  It found that a plurality (48%) of those 18-34 years old would leave the country instead of staying and fighting (45%) if they were “in the same position as the Ukrainians.”

Writing in the Wall Street Journal a shocked Mathew Hennessy reacted to the survey by saying:

“The conflict hypothesized by the Quinnipiac pollsters wasn’t a war for oil or empire.  Poll respondents were asked to envision a foreign invader on their own front porch.  Imagine Vladimir Putin as sent his shock troops to level your hometown, to occupy your high school and drop a missile on the hospital where you were born. If you won’t fight for hearth and home, what would you fight for?

Of course, freedom isn’t free, so we ought to avoid actions which suggest to young persons especially that ‘other people’ will protect them or, with respect to the loan program, pay their bills.  Handouts grind down the classic American virtues of altruism and self-reliance, and corrodes the nation’s spirit – none of which is good for national security.

In a recent article in The Hill, attorney Steve Cohen discussed linking debt ‘forgiveness’ to mandatory national service (and not necessarily in the military which would remain voluntary).  To investigate this proposal, he commissioned a poll about the idea of national service in general.

Among other things, the proposal which the respondents were asked to consider in the survey included this condition:  “People who fail to successfully complete their National Service obligation shall not be eligible for any Federal student loan or mortgage guarantee program.”

The results were, as he put it, “discouraging”. Specifically, he found:

“Two years ago, 80 percent of 18- to 22-year-olds supported the proposition. This year, the number had fallen to 34 percent. Similarly, in 2020, 88 percent of adults supported mandatory service; today, it’s 38 percent.”

In my opinion, it is vital that we resuscitate the virtues of self-reliance – including paying one’s bills – as well as altruism.  Government assistance without any requirement to reimburse or to provide some sort of service to society should be reserved for those truly unable to help themselves.  

Unfortunately, the loan ‘forgiveness’ program reinforces the ‘something-for-nothing’ mindset that does not serve America’s interests, security and otherwise.

Concluding thoughts 

Regretfully, this issue is encrusted with politics. The Economist assessed the election year loan ‘forgiveness’ program as being “[g]ood politics, maybe, but poor policy.”

At least initially, the “politics” piece seems to be working as Bloomberg reports (Democrats Dream of Young-Vote Enthusiasm on Student-Loan Relief) that a “poll conducted between Aug. 24 and Aug. 26, covering the period that Biden made the student loan relief announcement, showed his approval rating at 59% with voters under 30 years old, a 10-point surge from July.”

Meanwhile, we are also told: “Republicans are working to make President Joe Biden’s historic action to forgive student loan debt an economic wedge issue in November’s midterm elections, with a barrage of attacks casting the move as elitist and unfair to the plumbers, waitresses and truck drivers who never went to college.”

In short, it is yet another divisive and polarizing issue that the country doesn’t need ever, but especially not right now.  As hard as it might be, we need to put aside politics and act in a bipartisan manner – it’s just too important an issue to allow it be reduced to partisan bickering.

And, yes, we do need to help make higher education more affordable and accessible – a better educated citizenry can certainly strengthen national security.  But a blanket handout without adequate consideration of its implications and cascading effects is a serious mistake – not only for national security, per se, but for American society as a whole.

Update (Nov 16)

The Washington Post reported yesterday that a panel of Eighth Circuit Court of Appeals ruled 3-0 to issue an injunction “preventing the government from discharging any debt while it considers a lawsuit to end the policy.”

This ruling, the Post says, “arrives days after a federal judge in a separate lawsuit in Texas declared Biden’s debt relief plan unlawful, effectively barring the Education Department from accepting more applications and discharging any debt.”

The Wall Street Journal editorial board said “Mr. Biden’s loan write-off is the largest presidential abuse of power in decades, and it’s good to see courts stepping up to their obligations to enforce the Constitution.”

Remember what we like to say on Lawfire®: gather the facts, examine the law, evaluate the arguments – and then decide for yourself!

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