By: George William
Biden has announced plans for student loan forgiveness for those making less than $125,000. The plan would take out $10,000 of standing debt of those who qualify.
According to a nonpartisan study, the plan would cost $298 billion in 2022 and a total of $329 billion by 2031 if the policy is renewed each year. A report from the Brookings Institution observed that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owned by the bottom 20%.
A CNBC survey shows that 59% of Americans are worried that student debt cancellation “will make inflation worse.”
Lawrence Summers — who served as Treasury Secretary under President Bill Clinton and National Economic Council Director under President Barack Obama- has criticized the plan by the Biden admin, “The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers,” Summers said. “If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.”
Summers continued, “Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college,” Summers explained. “Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.”
Back in July on last year, Nancy Pelosi said during a press conference that Biden didn’t have the “power for debt forgiveness”. That such a thing is the job of Congress. As of this article, there has been no announcements on how the admin has not stated how they plan to get around this.