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“President Joe Biden announced Wednesday that he will cancel $10,000 in federal student loans for millions of borrowers… Borrowers who earn less than $125,000 a year, or $250,000 for couples who file taxes jointly, will be eligible for debt cancellation. Pell Grant recipients, who make up the majority of student loan borrowers, will be eligible for an additional $10,000 in debt relief, for a total of $20,000.” NBC News
The right is critical of the plan, arguing that it is a handout for Democratic voters and will do nothing to solve student debt long-term.
“We should eliminate the labyrinth of government grants, loans, subsidies and guarantees that assert an open-ended public commitment to financing anything a university can think to charge for. Public support should come at the state level through funding of state university systems and at the federal level through a simple, means-tested grant that covers, say, 50 percent of the median state’s four-year public university tuition…
“Where would students find additional funding for more expensive options?… Fortunately, institutions exist with the capital to finance all the necessary borrowing, the information to assess the wisdom of borrowing to enroll, the resources to help students succeed and the incentives to make the system work. Those institutions, of course, are the colleges themselves. Just as sellers provide financing for cars, capital goods and sometimes real estate, colleges should be expected to finance the education they provide.”
Oren Cass, Politico
“Paying a huge bribe to college graduates at a moment when Democrats’ political fortunes are looking up is insanely risky, potentially even disastrous. Maybe the bribe works by tilting a few suburban swing voters who were leaning Republican back towards the Dems. But even if it does, that’s a net loss for Democrats if it ends up tilting even more furious working-class voters into the GOP’s column. Remember, most Americans haven’t gone to college…
“A sane political party that’s been bleeding working-class support to the GOP during the Trump era would have done something closer to the opposite of all that, engineering a way to bribe lower-class voters and sticking better-educated ones with the bill. They could have seized on Mitt Romney’s child tax credit as an opportunity for bipartisan compromise, expecting that voters would credit the president’s party on balance for its passage. Instead they’re saddling [Tim] Ryan and other vulnerable Dems with indefensible regressive wealth redistribution on an enormous scale.”
Allahpundit, Hot Air
“It’s important to appreciate that there has never been an executive action of this costly magnitude in peacetime. Not Mr. Obama’s immigration amnesties, not his Clean Power Plan, not Mr. Trump’s border-wall fund diversion. Nothing comes close to this half-trillion-dollar or more executive coup. Congress authorized none of Mr. Biden’s loan relief and appropriated no funds for it…
“Congress authorized none of Mr. Biden’s loan relief and appropriated no funds for it… Even Mr. Biden said in December 2020 it was ‘pretty questionable’ whether he had authority to cancel debt this way.”
Editorial Board, Wall Street Journal
The left supports the plan, arguing that it is necessary to help graduates in debt, but calls for permanent reforms.
The left supports the plan, arguing that it is necessary to help graduates in debt, but calls for permanent reforms.
“The White House estimates that people making less than $75,000 per year will represent 90 percent of its proposed relief. A college education does not guarantee personal wealth, and student-loan debt by definition excludes the truly rich. A Rockefeller doesn’t need to take out student loans to pay for college. Most debtors, in fact, had Pell Grants, designed for ‘undergraduate students who display exceptional financial need.’ Biden’s plan is hardly some giveaway to the American elite.”
Sarah Jones, New York Magazine
“A 36-year-old today who went straight to college from high school graduated right into the teeth of the Great Recession, when career-starting jobs were incredibly scarce. For many, graduate school felt like a safe harbor and good long-term investment — or so the college recruiters said. But that meant loans for living expenses along with pricey tuition, which can quickly inflate balances to $100,000 or more…
“The core argument for debt forgiveness is not that college graduates are more deserving than their degree-less peers. It’s that there are enough public resources to help both, and that graduates in the present are worse off than graduates in the past who benefited from more affordable public university tuition and weren’t thrown defenseless into an economic catastrophe.”
Kevin Carey, Vox
“For decades now, the government has been shoveling subsidies into colleges and universities, and (with a few exceptions) they have responded by jacking their prices through the roof. Biden can’t do this by himself, of course, but it’s long since time for the government to start demanding a better deal…
“One option would be attaching even more stiff regulations to federally subsidized student loans—simply requiring institutions to cut down on fancy amenities, administrative bloat, and so forth. The administration has announced that the Department of Education would ‘hold accountable colleges that have contributed to the student debt crisis,’ but this consists of an annual watch list of college programs with high debt levels, and strongly worded letters to colleges asking for ‘institutional improvement plans.’ Obviously, this could be stronger.”
Ryan Cooper, American Prospect
“The average student debt load on graduation is more than $30,000, and the average student debt-to-income ratio is 55 percent… Biden’s student debt relief plan is a superb Band-Aid, but it’s a Band-Aid. We shouldn’t kid ourselves that the student loan solution to funding higher education will last much longer. It’s going to collapse, and before it does we should start moving toward a national policy that provides a college education, debt-free, to anyone who wants it.”
Timothy Noah, New Republic
Libertarian takes
The policy “will pour ‘roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning,’ says Jason Furman, formerly the top economic adviser to President Barack Obama. And with the income caps set so high, it remains an extremely regressive policy, heaping benefits on the most affluent demographics, while leaving everyone else to pay the cost through some combination of higher taxes, lower benefits, or higher inflation and interest rates…
“One study suggests that when Congress raised the caps on subsidized federal loans, as much as 60 cents of every extra dollar lent got eaten up by tuition increases. Which in turn ballooned loan balances, and in turn created political pressure to make student loan programs more generous to borrowers — as the government has over the years, undoubtedly putting further upward pressure on tuition. Trying to fix these problems by making it even more attractive to borrow money is like trying to quit smoking by switching to unfiltered cigarettes.”
Megan McArdle, Washington Post
“According to a recent analysis from the Penn Wharton Budget model, under Biden's debt forgiveness plan ‘about 70 percent of debt relief accrues to borrowers in the top 60 percent of the income distribution.’… Student debt forgiveness isn't the noble, equalizing project that its supporters claim it is. It's the personal project of some of our nation's most affluent and educated individuals. The college educations they benefited from will now be paid for by people who make less money than them and have less power.”
Emma Camp, Reason
