President Joe Biden is considering doing mass student-loan forgiveness, but “limited” to people who make less than $125,000 a year. That’s a clear sign he recognizes the horrible optics of debt-cancellation, which will largely benefit wealthier Americans. Yet the limit is a joke: Forgiveness would still help just the small minority of those who’ve gone to college and likely earn more because of that.
For starters, that $125K income cap is 10 times the national poverty line, and many just-out-of-college workers with student loans will easily fall under it (the average entry-level salary for college grads is less than $60,000, per the National Association of Colleges and Employers).
And many of these grads will do very well indeed — as doctors, lawyers or CEOs — later in life, but yet still wouldn’t have to repay their forgiven debt. Indeed, white-collar workers with advanced degrees account for nearly half the $1.6 trillion in outstanding federal student debt.
The Committee for a Responsible Federal Budget calculates that the “limited” Biden plan still costs the taxpayers at least $230 billion, with two-thirds of the benefit going to Americans in the top half of incomes. Oh, and: “It would also worsen inflation and increase the cost of higher education.”
How is this remotely fair to those who never went to college and, on average, make less? Or to those who did go but paid tuition in cash rather than borrow, even when it meant struggling to hold down jobs to earn the money?
Fact is, any way you cut it, loan forgiveness for any select group — relief of $10,000 per person would clear loans for just 15 million borrowers — will be unfair to the overwhelming number of Americans outside that group who’d pick up the tab.
Heck, not to give Biden & Co. any ideas, but why not debt-forgiveness for, say, homeowners struggling to pay mortgages? Car owners with auto loans? Folks who put too much on their credit cards?
Plus, forgiveness presumably would be a one-time event: Only those who hold debt right now would qualify for relief. If you’ve already paid off your loan, well . . . consider yourself a sucker.
Ditto for those who borrow in the future, unless there’s even more forgiveness down the road, which would only encourage more borrowing — and drive tuitions higher still.
That’s the biggest flaw with student-loan forgiveness. It neglects the root problem: over-borrowing for overpriced colleges that too often fail to ensure graduates earn incomes sufficient to repay the debt.
Biden doesn’t care about that: He’s got one eye on his progressive base and the other on the potential votes of student-loan holders. Everyone else can just lump it.