The big news this week is President Joe Biden’s latest pet project: erasing as much student loan debt as possible. His plan, which he just signed today, is designed to ease the burden for borrowers.
Critics say it will only jack up the national debt and hit taxpayers hard. Many also say it’s simply another step toward socialism, as the Democrat agenda continues to involve handouts to stop economic suffering.
But the real cost of this plan is out now – and the number might be difficult to accept.
Firstly, according to an analysis from the University of Pennsylvania’s Wharton School, this plan will only worsen inflation, and also leans toward helping those who are already well-off financially.
The plan includes canceling $10,000 in student loans per borrower earning under $125,000. Some Democrat leaders pushed for a $50K cancellation but Biden settled on $10K.
While far-left individuals say it isn’t enough, the total cost to John Q. Taxpayer is going to turn some heads.
Via The Daily Wire:
A reported plan from President Joe Biden to cancel thousands of dollars in student loans per borrower would worsen inflationary pressures while largely helping higher income earners, an analysis from the University of Pennsylvania’s Wharton School reveals.
Nixing $10,000 of student loans per borrower would cost $298 billion in 2022 and a total of $329 billion by 2031 if the policy is renewed each year, according to the nonpartisan Wharton analysis.
The report adds that less than 32 percent of the funding would help Americans in the two lowest income brackets, while 42 percent of the money benefits those making over $82,400/year.
Cato Institute education policy analyst Colleen Hroncich said that people in higher-income homes are more likely to have more student debt, so cancellation plans “benefit the wealthy more than middle-or-lower-income families.”
In fact, a Brookings Institution report said that about 1/3 of all loan debt is owed by the richest 20% of households, and only 8% is held by the bottom 20%.
The other issue is that canceling some of the student loan debt could cause students to “eventually reorganize their financing toward additional borrowing,” which only exacerbates the issue overall.
Furthermore, experts are saying such a move has a psychological impact as well:
If we cancel a chunk of student loan debt once, those carrying these loans will think it could happen again. On top of that, what’s stopping the government from considering cancellation of credit card debt?
The latest survey from CNBC shows that nearly 60 percent of citizens are worried that Biden’s debt cancellation plan will “make inflation worse.”
The recent “Debt Reduction Bill” has been widely criticized for not actually reducing inflation in the country, and this student loan cancellation idea appears to be causing more concern among many voters.
We’ll have to see if this has a negative impact on Biden’s approval rating, and on the midterm elections in November.
- A new report shows that Biden’s student loan cancellation move will cost taxpayers $329B by 2031 if it’s renewed each year.
- It also shows that because wealthy households have more student debt, it will help them more.
- Critics worry that it will only increase inflation, and start a slippery slope of debt cancellation in the future.
Source: The Daily Wire