By CASEY HARPER | THE CENTER SQUARE
It will take less than a decade for student loan debt to return to the level it was at before President Joe Biden canceled nearly half a trillion dollars of the debt at taxpayer’s expense, a new report from a leading budget group says.
The Committee for a Responsible Federal Budget released the analysis. They estimate that Biden’s debt cancellation of $10,000 per borrower and $20,000 for Pell Grant recipients will cost the federal government between $440 billion and $600 billion.
However, they say it will only take a few years for student debt levels to rise again, erasing the cuts of Biden’s cancellations.
“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,” CRFB said. “In inflation-adjusted dollars, student debt would return to its current level in 2031.”
CRFB also pointed out that the delay in payments, which has gotten little attention compared to debt cancellation, has a big cost for taxpayers as well.
“This four-month payment pause extension will add $20 billion to the deficit,” the group said. “The repayment pause has now been extended seven times, lasting 33 months, bringing the total cost of the pause since the beginning of the pandemic through the end of this year to $155 billion.”
CRFB isn’t the only one critical of Biden’s plan. Several economists have raised the alarm about how the cancellation will hike inflation.
Former Obama administration economist Jason Furman said the cost of forgiving the loans will be felt by the rest of the country.
“Student loan relief would lead some people to spend more,” said Furman, who also works as a senior fellow at the Peterson Institute for International Economics. “We can’t make more so others would consume less. The way that happens is inflation. Budget constraint. 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.”
Furman said the plan would be “gasoline on the inflationary fire.”
“Pouring roughly half a trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Furman wrote on Twitter. “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”
The majority of Americans feel the same way. As The Center Square previously reported, a NBC/Momentive poll from last month showed that 59% of surveyed Americans report they are concerned that canceling student debt will raise inflation.
“Republicans are especially concerned: 81% of Republicans say student loan forgiveness will make inflation worse, nearly double the number of Democrats who say the same (41%),” Momentive said.
Lawmakers also blasted Biden for the plan, citing inflation, which has hit the highest level in over four decades.
“Now, President Biden is doubling down on his abandonment of working Americans by issuing an illegal order to use hundreds of billions of your tax dollars to ‘forgive’ the loans of college-educated individuals who voluntarily took on debt to finance their education,” U.S. Sen. Rick Scott, R-Fla., said. “The American people, who are already struggling to keep up with Biden’s raging inflation crisis, are disgusted with the Democrats’ dangerous, socialist agenda and demanding action. Republicans must stand united to repeal the IRS supersizing and pass my bill to force every member of Congress to go on the record for student loan forgiveness.”
Casey Harper is a senior reporter for the Washington, D.C. Bureau. He previously worked for The Daily Caller, The Hill, and Sinclair Broadcast Group. A graduate of Hillsdale College, Casey’s work has also appeared in Fox News, Fox Business, and USA Today.
Don’t go to college. Work no more than 35 years in the workforce. Retire early in your mid 40s to early 50s.
This will ensure you pay no more into the system than you have to. In retirement everything is cheaper.
I did this and retired at age 47 in 2019. I pay 1/3 the total taxes in total then I did while working. The vast majority think college is the ticket to economic success. It isn’t. College is the first step toward economic slavery and destruction for most. The last 2 years should have been a wakeup call for the goal of economic freedom. Look at all the slaves who complied with wearing masks, getting tests that are laced and tainted, and getting deadly shots designed to kill. I didnt wear a mask one time, get any tests that made me sick or were designed to convince me the virus hoax was real, and I didnt take any shots. Guess what. Nobody in my home ever got sick. Nobody has control over me. And this is all because I was smart enough to stay away from college, stay away from debt of any kind, and understood since I was a teenager that no employer cares about you and you need to become completely independent from the workforce. Let the slaves deal with the BS.
The college loan feint is another step toward making free college universally available to anyone who wants to attend, kind of like what they want to do with expanding preschool. You gotta start the indoctrination early and keep it up as long as humanly possible. As the universities are the foundation of the current democrat coalition, this should be expected. Think of it as a self-licking ice cream cone. Cheers –
I know so many young college graduates who spent tens of thousands (or the parents did) on a college degree and never worked a day in the field. The degree was almost worthless and the professions they are now in didn’t require a degree or could have been accomplished in trade school/community college.
which type of loans should i choose ?
I need ungent Money.
anyone can help ?
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