President Joe Biden plans to do a mass student loan forgiveness, but “limited” to people earning less than $125,000 a year. It’s a clear sign that he recognizes the horrible optics of debt cancellation, which will largely benefit the wealthiest Americans. Yet the limit is a joke: forgiveness would be still helping only the small minority who went to college and probably earn more because of it.
For starters, that $125,000 income cap is 10 times the national poverty line, and many workers coming out of college on student loans will easily fall below it (the average college graduate entry salary is lower to $60,000, by the National Association of Colleges and Employers).
And many of those graduates will do very well — as doctors, lawyers, or CEOs — later in life, but still won’t have to pay off their canceled debt. Indeed, white collar workers with Advanced degrees account for nearly half of the $1.6 trillion outstanding federal student debt.
The Committee for a Responsible Federal Budget calculates that the “limited” Biden plan still costs taxpayers at least $230 billion, with two-thirds of the benefits going to Americans in the top half of income. Oh, and: “It would also worsen inflation and increase the cost of higher education.”
How fair is it to those who have never been to college and who, on average, earn less? Or to those who did go but pay tuition in cash rather than borrow, even if it meant struggling to hold down a job to earn money?
The fact is, whichever way you cut it, loan forgiveness for any selected group — $10,000 relief per person would offset loans for just 15 million borrowers — will be unfair to the overwhelming number of Americans outside of this group who would pay the tab.
Heck, not giving Biden & Co. ideas, but how about debt forgiveness for, say, homeowners struggling to pay their mortgages? Car owners with auto loans? People putting too much money on their credit cards?
Further, forgiveness would likely be a one-time event: only those who currently hold debt would be eligible for relief. If you’ve already paid off your loan, fine. . . consider yourself a sucker.
Ditto for those who borrow in the future, unless there is even After forgiveness on the road, which would only encourage more borrowing – and further increase tuition fees.
This is the biggest flaw of student loan forgiveness. It overlooks the fundamental problem: excessive borrowing for overpriced colleges that too often fail to guarantee graduates enough income to pay off debt.
Biden doesn’t care that: He has one eye on his progressive base and the other on potential votes from student loan holders. Anyone can just group it together.