Oh boy. Now the Supreme Court ruled against President Biden’s plan to forgive about $400 billion of college debt outstanding. This is a huge problem. Consider that millions of borrowers have gone deeper into debt since Biden last year announced his plan.
You might say that that was foolish or irresponsible. But it would ignore the reality that debt has increasingly become a way of life for struggling households. Given this, it seems almost realistic that consumers would shoulder new debt under the expectation that their responsibility for existing student loans will disappear.
Of course, now that the student loan burden has not vanished, we have a potential disaster in the making. I do not even want to imagine the combined impact of at least hundreds of thousands if not millions of households having to declare bankruptcy.
In my view, some bipartisan corrective measure must be taken. As much as I prefer universal to means-tested programs, I buy the frequent argument that many households slated for forgiveness do not really need the help. If Biden instead targeted loan forgiveness just to households in financial dire straits, his program would probably cost less than half of the original price.
Agreeing on qualifying criteria would not be easy. But the alternative is much worse. And we can always hope that a successful resolution to this problem could serve as a benchmark for other debt challenges. Like, for example, the developing country debt crisis.