Column: Canceling a student loan could only make inflation worse for us | Opinion
Reproduced with permission from The News & Observer of Raleigh
During his campaign, President Joe Biden floated the idea of student loan debt forgiveness, wiping out millions in monthly payments. After 16 months in office, he is backtracking on that idea, recently telling a group of reporters at the White House that he was “looking closely” at federal student loan debt forgiveness and would decide in a few weeks.
Although Biden said $50,000 in individual student debt cancellation is too much, he mentioned $10,000 on the campaign trail. By any amount, it’s one of Biden’s worst ideas to date. Forgive student loans, offering “student loan debt forgiveness” – whatever you call it – an idea by any other name never got so bad.
Numbers vary, but there are an estimated 43 million federal student loan borrowers. The average student loan amount nationwide varies: some statistics suggest it is around $28,000; others say it’s as high as nearly $37,000. Depending on the amount, students and adults pay around $300 per month.
Of course, any adult who pays rent or mortgage, car loan, student loans, and monthly Amazon Prime/Hulu/Netflix/Starz/HBO/Disney+ subscriptions would love to see a small percentage of their monthly budget wiped out by a magical fairy. . functioning as a truly lenient president, but the idea is dumb on many fronts.
The president does not have the executive power to write off knowingly and deliberately accumulated debt. The federal government issues over 90% of all student loans, and the rest is owned by private banks and operated by the government.
Biden’s team drew inspiration from Harvard lawyers who suggest playing semantics with the Higher Education Act to justify its use of authority. This is bullshit. The president is not a genius with absolute power.
Canceling student loans would increase inflation because that’s how the economy works.
What do you think people will do when they suddenly have $300-400 more per month? That’s enough for a small car payment, or for a vacation, or even a house. This sudden influx of spending into the market will drive inflation even higher.
It would also hurt the federal government’s bottom line: Canceling $10,000 per borrower would cost the federal government about $373 billion, while the estimated price of eliminating $50,000 per borrower would be nearly $1 trillion. of dollars.
Unless Biden targets his student debt relief, any program would disproportionately benefit the middle and upper classes. In 2019, households with a graduate degree owed 56% of outstanding student debt.
Do doctors and lawyers need this gift? And that’s to say nothing of the people who responsibly paid their or their child’s tuition in cash or paid off loans early through determination and hard work.
This aspect of loan forgiveness, in particular, coupled with what it suggests about accountability, fills people with searing rage. It juxtaposes two things people hold dear: money and personal responsibility.
Wiping out middle and upper class loans, loans they knowingly hoarded to get a degree that would then earn them a high salary, negates personal liability and allows them to walk away with thousands of dollars. It is unethical.
The effect of loan forgiveness would be that working-class people who didn’t even go to college would help pay off the loans of those who did and earn more. It stinks of a new type of Western socialism.
Biden’s loan forgiveness program would be an effort to equalize income and distribute debt and wealth all at once. It would punish people who worked hard and not reward those who did.
Socialism fails every time it is tried. Biden shouldn’t try it here.
Nicole Russell is a writer and mother of four who has covered law, politics and cultural issues for The Washington Examiner, The Daily Signal, The Atlantic and The New York Post.