July 3, 2023
Why was it ok for PPP Loans to be forgiven for business owners but student loans not ok to be forgiven for some student borrowers through the President’s program?
Well – there is a technical answer for that question and a political debate about it.
First – I’ll talk about the technical answer.
You have to understand the constitution gives Congress –the power of the purse. Not the President. That means the House and Senate are the ones who get to decide how money in the United States is spent. While the president sets an agenda, and gives a proposal of how he would like to see money spent — in the end, Congress has to pass a law to make is so. In the end it’s up to congress.
In September of 2020 – Democrats and Republicans in Congress overwhelmingly decided to spend money on the CARES Act. That was the first piece of legislation during the pandemic that gave millions of Americans a stimulus check – but it also gave qualified business owners who were struggling to keep the lights on and pay their employees — the Paycheck Protection Program which included fully forgivable loans – or PPP loans. The fact is – according to government data – the PPP loan program alone cost US taxpayers more than $700 billion and the average PPP loan that was forgiven was more than $70,000 per business.
So the procedural answer to why PPP loans were not only available but also forgivable but not student loans – is pretty simple. The answer is — because Congress didn’t approve the student loan forgiveness program which would only have applied to those making less than $125,000 a year but have cost US taxpayers about $400 billion. The President was trying to do that on his own through authority he and the Justice Department believed– and still believes he has through the HEROES Act of 2003. As we all know – the Supreme Court in a 6-3 decision straight along ideological lines — disagrees with that interpretation of the law.
But there’s also a political debate over why it it’s ok for PPP loans to be forgiven but not student loans. It’s something the President just recently called attention to.
But those opposed to the President’s student loan forgiveness program including all the Republican in Congress praised the Supreme Court’s decision striking down the program. The top Republican in the Senate – Minority Leader Mitch McConnell said “the American people know that the Biden administration’s student loan socialism plan would be a raw deal for hardworking taxpayers. …“the president of the United States cannot hijack twenty-year-old emergency powers to pad the pockets of his high-earning base and make suckers out of working families who choose not to take on student debt.”
The President and the Secretary of Education are now working on a new student loan forgiveness program that the President believes he has the power to implement through the 1965 Higher Education Act.
