The student loan write-off announced by Joe Biden on Wednesday may well give Democrats a boost among their base in advance of the midterms, but the handout will ultimately only be given to less than a third of likely voters. Meanwhile, all taxpayers will be getting the bill and college tuition is virtually certain to spike even higher.
Biden’s newly announced executive order is designed to cancel up to $10,000 in student loan debt per borrower and up to $20,000 for those who received Pell Grants. The order also extends the pause on repayment of student debt through the end of the year. Borrowers had been scheduled to begin paying again on September 1.
The debt cancellation only extends to borrowers who are now earning less than $125,000 annually. Undergraduate borrowers will be allowed to cap monthly repayments at 5% of their income.
The White House has said that there are now more than 45 million Americans who owe the federal government student loan debt. The total owed by all borrowers sits at a massive $1.6 trillion.
Even if every borrower is considered to be a registered voter, only about 28% of all registered voters will benefit from the debt forgiveness. The true number of voters who will benefit is certainly lower than that.
The large majority of taxpayers, including those who have paid back student loans or never took them out, will be on the hook for paying for the benefit. Many who will benefit at the expense of poorer taxpayers are those who have recently received professional degrees but have not yet begun to earn substantial salaries.
The National Taxpayers Union estimates that the student loan handout will cost the average American taxpayer around $2,085.
Former Obama economic advisor Jason Furman observed on Twitter that the program will certainly lead colleges to increase costs. He described the plan as “government overreach” and said it is inflationary and “reckless.”
Thank god we're finally addressing the plight of America's most disadvantaged community, Harvard Law graduateshttps://t.co/zAeC0wgXyh
— David Burge (@iowahawkblog) August 24, 2022
Those who are supported by federal loans to students like Harvard Law School ultra-liberal professor Laurence Tribe are obviously grateful for the handout. Tribe disingenuously said that he is thankful for the benefit that will accrue to his former law students.
Sen. Elizabeth Warren (D-MA) of course has long pushed for all student debt to be handed over to taxpayers, along with all future costs of college for everyone. That is no big surprise, given she has made almost $430,000 courtesy of the student loan government industry teaching a couple of classes at Harvard.