President Biden issues order to forgive student loans
The Concordia Courier
By Eva Prewitt | 9/2/2022
President Joe Biden last week announced his plan to forgive up to $10,000 in student debt for individuals who make less than $125,000 dollars per year, as well as giving $20,000 dollars to recipients of the Pell Grant.
The Biden Administration issued a statement when the bill was announced, saying, “Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree.”
“Today, President Biden is announcing a three-part plan to provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic,” the statement continues. “This plan offers targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families.”
Supporters of the plan said that the move was a long time coming, and that it was a necessary step in the Biden Administration’s tenure. Biden had long claimed that relief from student loans would be coming, and many Democrats viewed this as a fulfillment of his campaign promise.
However, critics cited a Penn Wharton Budget Model, which showed that a one-time maximum debt forgiveness of $10,000 for borrowers who make less than $125,000 will cost around $300 billion for taxpayers.
Some economists argue that this will spur inflation. The $300 billion adds up to about the amount of deficit reduction in the Inflation Reduction Act which was passed earlier this month. Others argue that with fewer costs of student loans weighing on recent college graduates, they might be able to afford homes with more ease.
Many economists are concerned that in the end the cost will fall on taxpayers, and the administration hasn’t given much explanation as to how the plan will be paid for.
"If this ends up being added to the national debt, it's just going to drive up the interest costs needed to not default on that figure," said Brian Riedl, a senior fellow in economics at the Manhattan Institute in an interview with FOXBusiness. "All of that is eventually going to drive up taxes because at some point you'll have to figure out a way to pay that debt."
The administration and its allies, however, say that the bill is already paid for, through deficit reduction that is occurring separately from the new handout.
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