President Joe Biden announced on Wednesday that he was unilaterally canceling up to $10,000 student loan debt for individuals earning $125,000 or less and families making $250,000 or less. For those who received Pell Grants, they will be eligible for up to $20,000 in debt forgiveness, with the same income thresholds.
WOW: @facebook says our post about paying back loans violates their “community standards.”Big Tech’s at it again. pic.twitter.com/Oo5lESfxwU — House Judiciary GOP (@JudiciaryGOP) August 25, 2022
Biden said in remarks Wednesday at the White House about the debt cancellation that it coupled with ending the student loan repayment moratorium at the end of December is an “economically responsible course.” “As a consequence, about $50 billion a year will start coming back into…the Treasury because of the resumption of debt,” he said. Biden added that new revenue expected to come in through higher taxes from the Inflation Reduction Act — which he said would be $300 billion over 10 years — will help pay for the program, as well. The National Taxpayers Union estimates Biden’s debt cancellation plan will cost approximately $329 billion in the next decade, which would work out to about $2,085 per taxpayer. The Committee for a Responsible Federal Budget determined that canceling the debt will eliminate the deficit reduction component of the Inflation Reduction Act. That new revenue from higher taxes was supposed to be the main part of the legislation that made it disinflationary. The Penn Wharton Business Model calculated the Inflation Reduction Act would lower the deficit by $248 billion over 10 years, unless the enhanced Affordable Care Act subsidies are extended over the entire decade, in which case deficit reduction would be just $89 billion. Former Clinton Treasury Secretary Larry Summers warned in a series of tweets on Monday that canceling student debt would be inflationary. “Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions,” Summers said.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.I’ll have more details this afternoon. pic.twitter.com/kuZNqoMe4I — President Biden (@POTUS) August 24, 2022
Former Obama administration economist Jason Furman also believes the debt cancellation will be inflationary. “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Furman tweeted Wednesday.
Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.— Lawrence H. Summers (@LHSummers) August 22, 2022
“Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.” This article appeared originally on The Western Journal.
Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless. Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.— Jason Furman (@jasonfurman) August 24, 2022