Biden’s student debt write-off in numbers: 41M wave goodbye to college debt, but 240M without degrees and other taxpayers each foot $2,500 towards $600B plan that could worsen inflation, erase deficit reductions and prompt legal fights
- Joe Biden on Wednesday announced that $10,000 in student loans would be cancelled for those earning under $125,000
- The move is opposed by most Republicans and many of the president’s Democratic colleagues — either because it goes too far, or not far enough
- It remains unclear exactly how much the plan will cost, but estimates include an an eye-popping $600 billion
- While some 41 million borrowers are set to benefit, there are still some 240 million Americans without college degrees who will likely be footing the bill
- Are you winning or losing as a result of Biden’s debt largesse? Email [email protected]
How much will it cost?
The White House has not provided a comprehensive breakdown of the costs, instead vaunting a calculation of about $240 billion over a decade. Independent estimates by think tanks vary — but the scheme is doubtless very expensive.
The Penn Wharton Budget Model calculates a $605 billion price tag, which could ultimately exceed $1 trillion. The Committee for a Responsible Federal Budget (CFRB), an anti-deficit group, estimates a cost of between $440-600 billion.
In either scenario, the cost will exceed the $300 deficit reduction Biden achieved through his hard-fought climate, drugs and tax legislation — the so-called Inflation Reduction Act — over 10 years.
Who pays for it?
Student loans are money the government expects to recoup.
The shortfall will initially be absorbed by increasing the national debt, which must then be repaid either by the Federal Reserve printing more money or by levying $2,500 extra on each taxpayer, according to the National Taxpayers Union Foundation.
Who wins?
Some 20 million borrowers will have their loans wholly forgiven; 21 million more will have some debt forgiven. Nearly 90 percent of the relief will go to those earning less than $75,000 a year, the White House says.
There are other winners. The Heritage Foundation, a conservative think tank, says forgiving student debt and other federal subsidies boosts cash flows to education, drives up tuition costs, and lines the pockets of ‘woke institutions’ like Harvard and Yale, which each have endowments worth more than $40 billion.
Who loses?
The taxpayers who pay for it, including many of the 240 million Americans who do not hold college degrees and the millions of student loan recipients who repaid their dues — often by scrimping and working.
The move may also cause problems down the road, by pushing up college fees higher still, and raising uncertainty for students in the future about whether they should repay loans or hold out in the hopes of another government write-off.
Texas-based lawyer William Brotherton called the debt plan ‘disgusting’. He borrowed $5,000 to study at the University of North Dakota, which he repaid by working on the railroads, all the while supporting his family.
‘I don’t understand why young people today can’t get at least a part-time job so that they don’t have a huge debt to pay when they finish school,’ Brotherton told DailyMail.com. ‘Why should the majority of us pay for this giveaway!’
In a bizarre twist, the winners may also be losers. Beneficiaries may have to pay up to $1,100 in state-level taxes in at least 13 states because the $10,000-$20,000 in forgiveness could count toward an individual’s income when filing their taxes.
Some of the states with the largest poverty levels, including Arkansas, West Virginia and Mississippi are among the states where individuals and couples could see increased tax burdens due to the student loan forgiveness.
(It’s a very long article. Click on the link if you want to read it all)
