Will the government pay off credit cards?
President Joe Biden’s recent announcement of college loan forgiveness is not only sending the wrong message to students who have taken out loans, it is the wrong thing to do for America in these troubling economic times.
And forget about the fairness of that latest spending plan, as it seems unfair to past students who have sacrificed over the years to pay off their college loans and equally unfair to the new students who are taking out college loans now and who will be expected to pay them in full.
Then there are the questions of how much the move will cost our country and who will pay for it? According to Biden, it will cost $300,000,000,000 ($300 billion), but outside estimates are closer to $600,000,000,000 ($600 billion).
Add all that into an election year, and let the politics explode!
Politicians, as usual, are on both sides of the fence, shouting at each other like angry neighbors, so I went to two independent, nonpartisan organizations to read their respective analyses, the Penn Wharton Business Model of the University of Pennsylvania — a nonpartisan, research-based initiative that provides accurate, accessible and transparent economic analysis of public policy’s fiscal impact — and the Tax Foundation, the nation’s leading independent tax policy nonprofit.
Penn Wharton says the three parts of Biden’s plan could end up costing us closer to $1 trillion than the $300 billion the White House claims. Penn Wharton estimates the debt cancellation alone would cost over $500 billion. The loan forbearance, or delayed loan payments, could cost another $16 billion, and the final part, the Income-Driven Repayment, which reduces the amount students repay over time, could be another $70 billion and, “depending on future (Income-Driven Repayment) changes, the total plan could exceed one trillion dollars.”
The Tax Foundation looked further into the impact the college loan forgiveness plan would have on our country. They said, sure, it would be beneficial to the students who get their loans reduced or paid off. But, there is no question it would increase our national debt, currently over a staggering $30 trillion and growing, and the plan would make inflation worse, which is already negatively affecting every American household.
The Tax Foundation believes the plan may “push college tuition higher, as more students treat loans essentially as grants,” which is exactly the opposite of Biden’s desire to make college more affordable.
I tend to believe more what those two independent organizations come up with than I do the politicians, simply because I think the plan was totally a political move on Biden’s part to win votes for his party.
His WhiteHouse.gov website states his college loan forgiveness plan is needed because “middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting away money for retirement and starting small businesses,” but he could say the same for people with credit card debt, and you don’t see him offering to pay off credit cards, do you?
Finally, who is going to pay the billions the plan will cost? The taxpayers, of course.
That will include hundreds of thousands of people who couldn’t afford to go to college but will now be asked to pay off college loans for students who did go to college and who did borrow the money.
How fair is that?
Well, it’s not fair.
You want fair? I do. Here’s what I believe is fair: When the borrower — in this case, the student — signed those student loan documents, they did so with the intent of repaying the loans. That’s how it works. It’s one of life’s more important lessons. You borrow the money, you repay the loan.
Maybe, just maybe, they should teach that in college.
As always, that’s my 2 cents for the week.
I am curious as to what your thoughts on this college loan forgiveness plan are. firstname.lastname@example.org.
Greg Awtry is the former publisher of the Scottsbluff (Neb.) Star-Herald and Nebraska’s York News-Times. He is now retired and living in Hubbard Lake. Greg can be contacted at email@example.com.