So who is ACTUALLY paying for these student loans, Joe? Daily Mail reveals who is behind Biden’s $150 billion bid to ‘buy votes’ by canceling debt
Joe Biden wiped out more student loan debt on Friday, bringing the total amount he has canceled to $153 billion for 4.3 million borrowers.
Republicans blasted Biden’s ongoing effort to forgive student loan debt as a “scam” to buy votes ahead of the presidential election.
They argue it’s unfair to taxpayers who didn’t go to college or pay back loans.
But the move to cut student debt could also have much wider implications for the economy.
According to Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, no one will immediately see their taxes go up because of the president’s largesse.
However, it will affect the public in several ways because it effectively shifts the debt of individuals to the nation.
“We are increasing federal borrowing to essentially reduce personal loans for student debt,” Goldwein told DailyMail.com.
He said that while the Biden administration has announced cutting $153 billion in student debt, the real number is much higher.
Factoring in the debt that will be canceled going forward and the interest canceled while repayments were paused during the pandemic, the total amount being forgiven is closer to $600 billion.
President Biden spoke at a student loan debt forgiveness event in Wisconsin on Monday. This week, the Biden administration announced that its student loan debt relief has totaled $153 billion to date.
Wiping out such a large amount of student loan debt could have several effects, including pushing up demand, leading to inflation.
The costs would therefore be spread on everyone else through higher prices.
Over time, the move will force the US to issue more bonds, and more people will buy those bonds instead of investing in the private sector.
“Americans will feel the cost up front through slightly higher prices and over time with slightly lower future incomes,” Goldwein explained.
If a course correction is needed for skyrocketing national debt while borrowing continues, it could take many different forms.
That could mean taxing the rich or cutting government spending, which would affect a wide range of Americans in different ways.
“You’re going to see an increase in the federal deficit and larger federal debt over time,” said Tristan Stein, Associate Director for Higher Education at the Bipartisan Policy Center.
“At the end of the day, it’s current and future generations of taxpayers who have to pay for the forgiven loans,” Stein said.
‘The national debt is $34 trillion. Inflation is making life unaffordable, and this administration is now forcing the American people to pay the cost of student loans that borrowers voluntarily took out.’
In its latest announcement Friday, the Biden administration said it had canceled an additional $7.4 billion for 277,000 borrowers.
‘Biden’s policies are completely backwards and illegal,’ replied Republican House Speaker Mike Johnson.
“Biden’s student loan socialism is a scam,” wrote Sen. Joni Ernst (R-Iowa). “He’s not “cancelling” – he’s saddling hard-working Americans with a massive bill.’
As Republicans lash out at the White House, the Biden administration has argued that the move gives borrowers breathing room and upward financial mobility that would allow them to further contribute to the economy and the middle class.
The White House responded to Republican criticism by singling out GOP members of Congress who had hundreds of thousands and even millions of dollars in Paycheck Protection Program (PPP) loans forgiven during the coronavirus pandemic.
Policy experts note that for every policy decision there are cost trade-offs, and at some point everyone pays some cost for different policies.
However, the fallback to the PPP argument was that Congress passed the program while the US economy was in jeopardy with the intention from the beginning that the loans would end up being forgiven.
Additionally, rather than being narrowly tailored forgiveness, it was seen as an effort with broad benefits, although the full extent remains disputed.
Supporters of Biden’s effort to cancel student loan debt outside the Supreme Court after the president’s original plan was blocked in June 2023
But as Republicans and conservatives push back against Biden, Democrats have praised the administration’s efforts on student loans.
Democratic House Whip Katherine Clark said Biden is ‘keeping his promise and helping ordinary Americans get by and move forward’.
And the Biden administration has promised it won’t stop there.
On Monday, Biden announced additional measures to cancel student loan debt that, combined with previous actions, could affect more than 30 million borrowers.
Between the SAVE program and new actions, the Penn Wharton budget model estimates the move will cost a total of $559 billion over ten years, including an additional $84 billion for the new proposals unveiled Monday, on top of the $475 billion previously was estimated for the SAVE plan.
But the effort in the White House is not without legal challenges.
18 Republican-led states have already sued the Biden administration over the SAVE plan.
The two separate lawsuits that focused on the SAVE plan come after GOP officials were able to stop the president’s original student debt plan, taking it all the way to the Supreme Court, which blocked the effort last June.
The Biden administration previously estimated that the SAVE plan would cost $156 billion over a decade. The Congressional Budget Office said the figure is closer to $230 billion.
What remains to be seen is how higher education institutions and prospective students respond to student loan debt forgiveness efforts. Experts question whether that will encourage colleges to raise costs or prospective students to take out larger loans under the impression they could be forgiven.
That could lead to future administrations taking further steps to forgive debt. But there’s also the reverse, with future administrations rolling back forgiveness while brave borrowers’ debt balloons.