Biden Announces $10,000 Student Loan Forgiveness Program - Here's Why Some Critics Oppose It
President Biden announced a student loan forgiveness program on Wednesday that would relieve debt for millions of borrowers.
The plan could dismiss up to $20,000 in student debt but only applies to individuals with federal loans who are making less than $125,000 a year.
According to the Penn Wharton Budget Model, one-time maximum debt forgiveness of $10,000 for borrowers who make less than $125,000 will cost around $300 billion for U.S. taxpayers.
More than 43 million Americans owe the federal government for student loans, with the average amount around $37,000.
That overall total lands at about $1.6 trillion.
Critics argue the plan will encourage colleges to raise tuition even higher, increase inflation, and penalize individuals who have avoided taking out student loans or have already paid theirs off.
According to the U.S. Census Bureau, only 23% of Americans have a Bachelor's degree, while only 14% have an advanced degree, like a Master's or Doctorate. Brookings Policy Institute finds that half of all outstanding student debt belongs to grad students.
And according to the Cato Institute, a college degree often leads to higher income. The average person with a bachelor's degree will earn an estimated $1.2 million more over their lifetime than someone with a high school diploma. Someone with a graduate degree, could see potential earnings rise to between $1.6 and $3.1 million.
"Biden's plan to cancel [loan debt] would be like taking money from a plumber to pay the debt of a lawyer," tweeted Greg Price, a senior digital analyst at XStrategiesLLC.
"Hardworking Americans are not responsible for paying off the student loan debt of others," Rep. Drew Ferguson (R-Ga.) tweeted. "Biden's fundamentally unfair proposal comes at the expense of taxpayers – many of whom have fully paid off their student loans."
Biden's debt forgiveness plan is expected to face legal challenges.
"The Constitution gives Congress, not the president, the power of the purse. A president unilaterally canceling up to $1.6 trillion would be a rank violation of that power," wrote Neal McCluskey, the director of the Center for Education Freedom at the Cato Institute.
"Mass cancellation would be a blatantly unconstitutional giveaway of taxpayer money to the people who arguably need it the least, and it would exacerbate the biggest problem in higher education," McCluskey adds.
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Liberal and progressive Democrats have pushed Biden to implement a student loan forgiveness program since he took office.
"With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers," Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) said in a joint statement.
The pair said they will continue to push for even more relief.
"Make no mistake, the work – our work – will continue as we pursue every available path to address the student debt crisis, help close the racial wealth gap for borrowers, and keep our economy growing," they said.
Critics say the debt forgiveness announcement right before the midterm elections looks suspicious.
"It's clearly an election year scam, one perfectly timed to try to gin up votes for a president whose approval ratings make him toxic on the campaign trail," wrote Carrie Sheffield, a Tony Blankley Fellow for Public Policy and American Exceptionalism at the non-profit Steamboat Institute.
"Wasteful COVID-19-related government spending helped create record, devastating inflation this year and 'forgiving' student loans will make inflation worse," she continued. "Biden also ignores that the U.S. government fueled the initial student loan debt balloon."
Meanwhile, the pandemic-era student loan repayment freeze has been extended until December 31.
