Using his pen again in “this year of action,” President Obama today signed an executive order to ease the burden of student debt at the expense of “millionaires.”
For those working in public service or the government, any remaining debt is forgiven after 10 years. An estimated 5 million more borrowers will become eligible under the new plan. Before today, only those who took out loans after 2007 were entitled to “Pay as You Earn” benefits.
To finance the program, Obama proposed closing “tax loopholes” for the wealthy, or what he called “millionaires.”
“This should be a no-brainer,” he said today at the White House, attacking Republicans in Congress for opposing the idea. “It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started in their lives.”
House Speaker John Boehner responded with a statement saying, “Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education, or improve access to federal student loans—nor will it help millions of recent graduates struggling to find jobs in the Obama economy.”
Obama’s decision to bypass Congress with an executive order snubs Senate Republicans who are debating alternative solutions they believe would address the fundamental causes of rising tuition costs.
Instead of addressing the root of the problem, they argue that granting more students access to federal education subsidies gives colleges and universities the green light to continue raising tuition costs.
“Repayment caps such as those offered through IBR and other policies put no downward pressure on college prices,” said Lindsey Burke, the Will Skillman education fellow at The Heritage Foundation.
Burke said the federal subsidies shift the responsibility of paying for higher education from the student to the taxpayer. She told The Daily Signal:
“Transferring the burden of student loan financing from university graduates—who will earn significantly more over the course of a lifetime than someone with a high school diploma—to the three-quarters of taxpayers who do not hold bachelor’s degrees is inequitable.”
Obama said the financial burden of the new “Pay as You Earn” installments will fall on “millionaires,” meaning higher income taxes for higher earners. “I want Americans to pay attention to see where their lawmakers’ priorities lie here: lower tax bills for millionaires, or lower student loan bills for the middle class.”
Education Secretary Arne Duncan told reporters at the White House that the administration doesn’t currently know how much the expanded payment cap will cost. “We’ll figure that out on the back end.”
Over the past 30 years, average tuition at a public four-year college has more than tripled, the White House said, while family income has largely remained stagnant. An analysis by the Federal Reserve Bank of New York found that recent college graduates in the United States face a more challenging job market, which has left them overqualified and underemployed.
Sen. Lamar Alexander, R-Tenn., ranking member of the Senate Committee on Health, Education, Labor, and Pensions, said the president’s time would be better spent on measures to increase employment. “Republicans are ready to offer and debate our proposals to create more good jobs and to create better schools which mean better jobs,” Alexander said.
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