President Joe Biden’s decision to transfer student debt to taxpayers is likely an inflationary, expensive mistake that will leave “American taxpayers footing the bill,” the Washington Post’s Editorial Board wrote Wednesday.
Citing a study by the American Enterprise Institute published in 2019, WaPo opposed Biden’s decision to transfer student debt because the greatest beneficiaries will be from high-income families. The paper also said the decision will fuel 40-year-high inflation.
“[S]tudents 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,” the paper said about the study.
Transferring student loans “is regressive” and “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,” WaPo continued. “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.”
WH cannot say how much the student loan forgiveness plan will cost and cannot say how it will be paid for but argues the value is worth the costs
— Kelly O’Donnell (@KellyO) August 25, 2022
“Biden’s plan is also expensive — and likely inflationary,” WaPo continued. “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.”
The paper also highlighted doubt that the 1965 Higher Education Act grants Biden unilateral authority to transfer student debt to those who perhaps have not borrowed student loans or have already fulfilled their debt obligations. Rep. Nancy Pelosi (D-CA) stated in April that Biden does not have the power to transfer student debt.
“People think that the president of the United States has the power for [student loan] debt forgiveness. He does not,” she said.
NANCY PELOSI in April: “People think that the president of the United States has the power for [student loan] debt forgiveness. He does not.”pic.twitter.com/0iz8uQeKXG
— RNC Research (@RNCResearch) August 23, 2022
According to the Committee for a Responsible Federal Budget’s analysis, the transfer of debt will roughly cost $360 billion. The federal government is already over 30 trillion in debt.
Biden’s announcement on Wednesday to transfer student debt to the taxpayer comes as the midterm elections are approaching. Biden’s polling numbers, which are a bellwether for midterm success, are underwater and have not budged since sinking to -13 percent in March.
Follow Wendell Husebø on Twitter @WendellHusebø. He is the author of Politics of Slave Morality.