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[Jeff P]

Washington Post Editorial Board | August 24, 2022 at 3:00 p.m. EDT
Biden’s student loan announcement is a regressive, expensive mistake:
https://www.washingtonpost.com/opini...eness-mistake/

Under progressive pressure to force grandiose policy changes, President Biden has generally embraced sensible reforms over flashy gimmicks. But his Wednesday student loan announcement did just the opposite.

After weeks of anticipation, Mr. Biden announced he will extend the pause on student loan payments until the end of the year. He will also forgive up to $10,000 for those making less than $125,000 a year — and up to $20,000 for Pell Grant recipients under that income threshold. Both measures are ill-conceived and misdirected.

...Widely canceling student loan debt is regressive. It takes money from the broader tax base, mostly made up of workers who did not go to college, to subsidize the education debt of people with valuable degrees. Though Mr. Biden’s plan includes an income cap, the threshold does not reflect need or earnings potential, meaning white-collar professionals with high future salaries stand to benefit. Student loans, moreover, are a poor proxy for household income: An analysis by policy researcher Jason D. Delisle found that, in 2016, students from high-income and low-income families were just as likely to take on debt for their first year in an undergraduate program — and students from high-income families borrowed the largest amounts.

...Mr. Biden’s plan is also expensive — and likely inflationary. The Committee for a Responsible Federal Budget estimates that extending the loan pause to the end of the year would cost $20 billion, while forgiving $10,000 for households making less than $300,000 would cost $230 billion. Together, these policies would nullify nearly a decade’s worth of deficit reduction from the Inflation Reduction Act. Moreover, it is unclear that the 1965 Higher Education Act even grants the president the legal authority to take such a sweeping step, given that it was historically understood to permit only more targeted relief.

...Mr. Biden’s student loan decision will not do enough to help the most vulnerable Americans. It will, however, provide a windfall for those who don’t need it — with American taxpayers footing the bill.

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-jp

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