US Senators Chuck Schumer and Elizabeth Warren have appealed to President Joe Biden’s administration to write off huge amounts of federal student debt, which is close to all student debt since the federal government – read: the taxpayer – is by far the largest provider of student loans. Schumer and Warren sponsored a resolution calling for loan cancellation of up to $ 50,000 for an unlimited number of federal student debtors, although Schumer also mentioned the income eligibility cap of $ 125,000, which would exclude only about the richest 10% of wage earners.

It would be a terrible policy on several levels.

First, it would be manifestly unfair. Getting into debt can be tough, but why should someone take your money, profit from it, and at least get you well?

And yes, borrowers generally take advantage of it. The average bachelor’s degree holder earns about $ 1 million more over their lifetime than the average person whose education ended with a high school diploma. Go beyond a bachelor’s degree – which is what many student loans are used for – and the payoff is even bigger, with someone with a professional degree, like law or medicine, earning around $ 2.3 million. more dollars over the course of his life. Meanwhile, the average federal student borrower‘s debt is around $ 36,500, according to the federal government. Appreciable, but small compared to the gain.

Borrowers also tend to be people who started their lives fairly well. The vast majority of student debt – 63% in 2016 – is held by people in the top half of the income distribution. The richest 25% of Americans own 34% of the debt.

The numbers clearly show that the massive student loan cancellation would go a long way to helping the rich. But wouldn’t that be an economic stimulus, especially valuable in these COVID-19 economic times?

The Schumer-Warren resolution touts it as such but ignores a big problem: The federal government has budgeted based on loan repayments. If they are not, someone else will have to make up for the lost federal revenue. So while the cancellation would put an additional $ 250 in the average borrower’s pocket each month, it would force someone else to cut back on their own spending or investment to send more money to Washington.

Goodbye, relaunch.

Meanwhile, those most affected by COVID-19 and its economic effects are not those with college degrees. These are people without them, working in jobs that can’t be done in the comfort and security of, say, his basement. The restaurateur needs more help than the accountant or the lawyer. And, of course, the only thing that will end the COVID-19 economic downturn is the end of COVID-19 itself.

A massive cancellation would also be detrimental to higher education policy.

America’s Ivory Tower is an overworked building, and forgiving student debt, far from solving soaring tuition inflation, or the spread of water parks on campus, would only exacerbate these problems. By taking taxpayer money and giving it to students, federal student aid has allowed colleges to charge higher prices and often encouraged students to demand more expensive things that require such prices. A massive cancellation would tell students to borrow even more because they won’t really have to pay it back.

Finally, there is the question of the presidential diktat. There is an interesting debate to be had as to whether current laws allow an administration to declare almost all student debt canceled.

But even if this were technically legal, it would be an affront to democracy, in which the people, represented in Congress, would have to decide such important questions as whether $ 1.6 trillion – that’s with a “t” – taxpayers’ money should be continuously returned to borrowers.

Paying off debt can be difficult, but it’s the right thing to do. To have a president who simply says that for-profit graduates can keep what they borrow would be the opposite.

Neal McCluskey is director of the Center for Educational Freedom at the Cato Institute (cato.org), a libertarian think tank based in Washington, DC.