Are you sitting down? Because a Trump administration student-loan official is resigning and calling for student debt forgiveness, saying the system is “fundamentally broken.”
The Wall Street Journal reported on the correct but nevertheless startling conclusion apparently reached by A. Wayne Johnson, a DeVos appointee who started out in 2017 as chief operating officer of the Office of Federal Student Aid, before moving into “a different role as chief strategy and transformation officer, leading a revamp of how the agency deals with borrowers and the companies that service the debt.” And what did he decide, after spending all that time on the matter? That most of that money is never going to be repaid and we ought to just hit the reset button.
Take it away, A. Wayne! “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,” he told the Journal, adding that, “The time has come for us to end and stop the insanity.”
His plan, specifically:
Mr. Johnson proposes forgiving up to $50,000 for anyone with federal student-loan debt, about $925 billion, he said. Nearly 37 million borrowers would have their entire student-loan balances canceled under the plan, he said.
He 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.
Mr. Johnson suggested paying for the plan largely with a 1% tax on corporate earnings.
He described the plan as aimed at removing the government from the student loan business, which does raise the question of whether a bunch of predatory private-sector lenders would just immediately rush into the breach, because it wouldn’t fix the conditions of rampant income inequality under which people decided to borrow that money. But it would certainly help address a pressing problem for literally millions of Americans, and Johnson is also proposing a $50,000 tuition voucher that wouldn’t need to be repaid. All of this would unfortunately require the participation of our completely worthless Congress.