The official in the Education Department who helped run the federal student loan program is resigning today and will reportedly call for forgiving a large percentage of the nearly $1 trillion in outstanding student loans.
The Wall Street Journal is reporting that A. Wayne Johnson, who was once CEO of the Office of Federal Student Aid and is now the chief strategy and transformation officer, will quit his post and run for the vacant Senate seat in Georgia.
Johnson is proposing up to $50,000 for anyone with an outstanding student debt. That would eliminate the loan balances for about 37 million people.
If elected, Johnson would also “advocate for a tax credit of up to $50,000 for people who already repaid student debt, which he sees as key to attracting wider support for canceling student debt,” the Journal said.
To pay for the plan, Johnson suggested to the newspaper that a 1% tax be placed on corporate earnings. The Journal noted that two years ago, Republicans in Congress approved a tax bill that included a cut in business tax rates.
“We run through the process of putting this debt burden on somebody … but it rides on their credit files — it rides on their back — for decades,” Johnson told the Journal, adding, “The time has come for us to end and stop the insanity.”
Johnson doesn’t stop there. How about $50K for any student who wants to go to college?
Johnson, who has a doctorate in higher education and wrote his dissertation on student debt, according to the Journal, told the newspaper that he “sees his plan as part of an effort to get the government out of the student-loan business.” As part of that plan, Johnson also proposes giving prospective students a $50,000 voucher to be used to pay for four years of tuition at a college or graduate school, according to the Journal.
So the government gets out of the student loan business and into subsidizing colleges and universities with free money for students? From the frying pan into the fire.
Before we dismiss the idea entirely, the debt burden these recent (and not so recent) students carry is crushing the economy. Young, college-educated Americans can’t buy a house, can’t get married, can’t start a family because they are debt slaves to the government.
We can argue about whether they should have gotten into debt in the first place, but when we’re done criticizing them for stupidity, telling them they never should have gone to college, and congratulating ourselves for being smarter than they are, we’re back at the beginning; $1 trillion in student debt affecting the lives of tens of millions of wage earners.
Something must be done and only the federal government is big enough to do it. Whether that means a partial forgiveness of debt as Johnson proposes or a total wipeout of student loans as Bernie Sanders has suggested, a bailout of some kind is called for.
Attached to any debt forgiveness measure should be a phaseout of all federal student loan programs, so we don’t find ourselves in a similar position 10 years from now.
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