By John Hood

In the modern era, few policies have been as reckless, lawless and perverse as Joe Biden’s repeated efforts to transfer student-loan debt to taxpayers. And few leaders have worked harder to block Biden’s schemes than the chairwoman of the House Committee on Education and the Workforce, North Carolina’s own U.S. Rep. Virginia Foxx.

President Biden’s latest package would cancel up to $750 billion in obligations for tens of millions of borrowers. Of course, to “cancel” obligations is not to create a financial windfall for borrowers out of thin air. It comes at the expense of creditors. In the case of federal loans, we taxpayers are the creditors.

In total, says the Committee for a Responsible Federal Budget, student-loan changes since 2020 will cost taxpayers as much as $1.4 trillion, a staggering sum that exceeds “all federal spending on higher education over the nation’s entire history.”

That’s reckless. And because most was foisted on us by presidential diktat, not congressional action, that makes it lawless, too. As for perverse, most of the benefit of student-loan cancellation goes to middle- and upper-income people, not the needy. Keep in mind that those who attend college have higher-than-average incomes, that graduate-student debt makes up a disproportionate share of total borrowing, and that Biden’s new order will completely eliminate debt for some 750,000 Americans who make in excess of $312,000 a year.

About all this, Virginia Foxx minces no words. “If President Biden spent half as much time working to address the root causes of our broken student-loan system as he does peddling his illegal free college agenda,” she said a few weeks ago, “college costs would be lower, the student-loan repayment process would be simpler, and students and families would be able to fill out the FAFSA.”

Foxx and other serious lawmakers on Capitol Hill don’t deny that the rising cost of higher education is a problem. They simply point out that transferring a cost from students to taxpayers — either directly through institutional subsidies or indirectly through loan cancellation — is not equivalent to reducing that cost.

Indeed, past subsidies for student loans tended to raise the prices charged by colleges and universities, since administrators knew that students could only “spend” their subsidies on higher education and wouldn’t shoulder the full burden of the higher prices.

Furthermore, previous federal expansions of eligibility for subsidized loans played a major role in creating one of the problems the Biden administration seeks to address: former students owing thousands of dollars for college programs that failed to serve their needs.

“Starting in the late 1990s,” write Adam Looney of the University of Utah and Constantine Yannelis of the University of Chicago in a new study, “policymakers weakened regulations that had constrained institutions from enrolling aid-dependent students. This led to rising enrollment of relatively disadvantaged students, but primarily at poor-performing, low-value institutions whose students systematically failed to complete a degree, struggled to repay their loans, defaulted at high rates, and foundered in the job market.”

They conclude that focusing student loans on economically needy students obtaining economically valuable degrees would “promote access to high-quality schools while also protecting students and taxpayers from excessive costs and enhancing the long-term sustainability of federal aid programs.”

In her proposed College Cost Reduction Act, Rep. Foxx included provisions to streamline the application process, improve transparency for prospective borrowers, and strengthen accountability for colleges and universities. While doubling Pell Grants for students on track to graduate on time, the legislation would tighten eligibility for loans, especially when used to finance graduate degrees with scant returns on investment.

The Congressional Budget Office has scored the College Cost Reduction Act. If enacted this year, it would save taxpayers $186 billion — a welcome result in the context of trillion-dollar deficits and massive gaps between projected federal revenue and promised federal spending.

“Lowering the costs and ensuring value for students and taxpayers is not an option,” Foxx says. “It’s a mandate that must be upheld.”

Agreed.

John Hood is a John Locke Foundation board member. His latest books, Mountain Folk and Forest Folk, combine epic fantasy with early American history.