Although President Joe Biden touted his recent student loan forgiveness plan as a tool to address skyrocketing debt among college-educated Americans, a recent study indicated that it will take just a few years for the nation to be in the same predicament.
According to the recent Committee for a Responsible Federal Budget report, Biden’s scheme is likely to add up to $600 billion to the federal debt and any measurable benefits will vanish in less than six years.
“We estimate that if all eligible borrowers receive debt cancellation, the overall student debt portfolio would return to its current level of $1.6 trillion in five and a half years – in 2028,” the researchers determined, adding: “In inflation-adjusted dollars, student debt would return to its current level in 2031.”
Furthermore, Biden’s decision to once again pause the repayment of federal student loans until the beginning of next year will tack on an additional $20 billion to the national deficit, bringing the total to an estimated $155 billion over the course of the nearly three-year COVID-related reprieve.
While polls show that conservatives are roughly twice as likely to express concerns that student loan amnesty will exacerbate the current rate of inflation, a number of prominent moderates and even a few liberals have also been sounding the alarm.
Stimulus checks weren't free.
Student loan forgiveness won't be free.
8.5% inflation proves this.
— Lance Gooden (@Lancegooden) August 26, 2022
As economist Jason Furman, who worked for the Obama administration, said, this “reckless” plan is the equivalent of “pouring roughly half a trillion dollars of gasoline on the inflationary fire that is already burning.”
He went on to explain: “If you add hundreds of billions to the deficit, eventually taxes will rise or spending will be cut. Or some tax cut or spending increases that could have happened won’t. Either way a cost. A full evaluation of student loan relief would take this into account. You might still like it – it benefits recent college grads and hurts most everyone else, both rich and poor. But don’t assume it is ‘free’ money – it is not.”
Overall, a recent NBC/Momentive survey found that 59% of Americans — 81% of Republicans and 41% of Democrats — are worried that student loan forgiveness will mean even higher inflation.
House Minority Leader Kevin McCarthy (R-CA) expressed many of his party’s most common concerns in a statement shortly after Biden announced his plan.
“In addition to making inflation worse, transferring student debt does nothing to curtail runaway costs in higher education, including graduate schools that charge more and more while delivering less and less,” he said. “Forgiveness without accountability is a free pass for failed programs with high costs and poor outcomes and would be a green light for colleges to continue tuition hikes. Indeed, taxpayers may face more costs in just a few years when student debt returns to its current level.”