A watchdog organization focused on defending entrepreneurs and employees from unfriendly public policy is suing the federal government over the Biden administration’s recently announced student loan forgiveness program.
Elaine Parker, president of the Job Creators Network Foundation (JCNF), wrote an article for Real Clear Politics about the lawsuit, saying that student debt constitutes a real problem but that bailing out loans fails to address the source of the problem.
“Bailing out student debt bails colleges out of their culpability in this crisis. It does nothing to reverse runaway college tuition, which is the root cause of the student loan problem,” Parker wrote in Real Clear Politics.
Parker also pointed out the dangers of injecting $426 billion into the economy during a year of record inflation — a year that has been especially hard on Michigan with its soaring prices.
U.S. Sen. Debbie Stabenow (D-MI) has spoken out in favor of the loan forgiveness program, claiming that the working class will feel its benefits the most.
“What we’re able to do… is focus our priorities on working people, on folks who just want a fair shot to work hard and make it,” Stabenow said, according to 9&10 News.
The lawsuit, originated by the JCNF, is an attempt to block President Joe Biden’s loan forgiveness program on the allegations that it is a violation of the processes of the Administrative Procedure Act. Parker describes the program as an “unprecedented executive power grab” and something that “does nothing to address the root cause of unaffordable tuition,” according to Just the News.
On Oct. 15, the Biden administration launched a preliminary Federal Student Loan Debt Relief application, following the announcement in August of loan forgiveness.
Some analysts fear that the loan bailout program has the potential to negatively affect small businesses. In a recent poll, the JCNF found that 75% of small business owners polled believe that loan forgiveness will not solve the problem of high tuition that it purports to address, and a majority believes that it will worsen rampant inflation.
One analysis, done by a publication of the Federal Reserve Bank of New York, suggests that about 40.5% of borrowers with student loans owned by the federal government will have their debt completely forgiven.
Several experts told Fox Business that Biden’s plan is expected to cause an increase in college tuition prices and actually add to the inflation crisis.
“Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition,” Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, told Fox Business. “This is pretty similar to the fact that historically, 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes.”
