Since President Biden unveiled his plan to "cancel" $10,000 of student loan debt per borrower, several economic organizations have released estimates detailing the total cost of the plan.

For instance, according to the Penn Wharton Budget Model, the "total plan costs could exceed $1 trillion."

Other organizations, such as the National Taxpayers Union, "calculate that the average burden per taxpayer in the U.S. is $2,503.22."

While it is necessary to focus on the astronomical real-world economic costs of Biden's unprecedented executive action, it is also worthwhile to examine the moral costs of the president of the United States unilaterally deciding that contracts are no longer sacred.

By this, I mean that not only does Biden's plan carry economic costs, but, perhaps more significantly, it has created a moral hazard that could have much more far-reaching and long-lasting consequences.

As we all know, when we enter into a voluntary contract, it is more than a simple document that we sign our names onto.  Indeed, contracts form the basis of a thriving free-market economy and an ethical society.

Every single day, we engage in multiple contractual obligations.  Some are small, like when we go to a restaurant and order items, which we are required to pay for when the bill arrives.  Others are large, such as when we purchase a car, a home, or furniture.

Sometimes we can pay for these items up front, sometimes we cannot.  In order for a society to function, contracts are essential because they act as the glue that connects and binds buyers and sellers.  In other words, contracts create trust.

However, that trust is a fragile thing.  Could you imagine the chaos that would ensue if restaurants became distrustful that customers would pay their bill at the end of their meal?

Well, unfortunately, Biden's shortsighted, politically motivated decision to arbitrarily "cancel" student loan debt is akin to him taking a sledgehammer to the sanctity of contracts.

Believe it or not, every single person who chose to take out student loans did so willingly.  Nobody was forced to enter into these contracts.  Every American who carries student loan debt voluntarily entered into a contract whereby he received funds up front to attend school, under the assumption that he would pay back those funds eventually.

I took out $40,000 in student loans and paid every cent back, plus interest.  Frankly, it would never occur to me to enter into a contract with the intent of not fulfilling my end of the bargain.  Historically, that has been the norm in the United States.

Yet, in one fell swoop, our nation's leader has basically said contracts don't matter; you don't have to fulfill your end of the bargain.  You can now count on someone to pay that debt for you.

Not only is this ethically dubious, but it also opens a Pandora's box.  If student loan debt can be arbitrarily "canceled," why can't credit card debt, auto loan debt, mortgage debt, or any other type of debt?

Moreover, we are teaching an entire generation that when the going gets tough, just ask to be bailed out.  This is a very dangerous development, and it should not be taken lightly.

Chris Talgo (ctalgo@heartland.org) is senior editor at The Heartland Institute.

Image: RawPixel.