Critics Say Cancelling Student Loan Debt Is Bad Policy
By Admin
As President Biden weighs whether to cancel student loans for a broad swath of borrowers, critics say it wouldn’t provide financial relief to the Americans who need it the most while also potentially hurting the economy.
Americans with school debt generally have higher income because a college degree tends to lead to a more lucrative career. As a result, erasing those loans would chiefly benefit college-educated people.
“If you look at who has student loans, it largely reflects who goes to college and graduate school in the U.S., and college and graduate school are overwhelmingly composed of people who are from upper middle class or high-income families,” said Adam Looney, a senior fellow at centrist think tank The Brookings Institution and an expert on student loan debt.
“Student debt is overwhelmingly owed by higher-income, better-off Americans, so that’s who gets the money under a widespread student loan forgiveness plan,” he added.
Last week, Mr. Biden said he is “taking a hard look” at forgiving some federal student loans, with a plan expected to be announced in a matter of weeks. He has not specified how much debt might be forgiven, but has said it is likely to be less than $50,000 per individual. Payments on borrowers’ existing student loans are currently paused through August 31.
Cancelling some student loan debt could pay political dividends ahead of November’s midterm elections, particularly among younger voters. But wiping the total $1.4 trillion that Americans currently own in student loans could backfire, according to some experts.
