The total cost of President Joe Biden’s plan to forgive student loans for millions of Americans is in, and it’s a doozy. According to the Congressional Budget Office (CBO), the plan will run around $400 billion.
Biden announced the plan in August, intending to erase $10,000 of debt for individuals making less than $125,000 a year, and $20,000 for Pell Grant recipients. It will also erase $10,000 for couples making less than $250,000 a year.
Forcing 87% of Americans who don’t have student loan debt to pay for $500 billion in debt (CFRB) held by mostly high-earners is a slap in the face.
— Rep. Scott Fitzgerald (@RepFitzgerald) September 27, 2022
What The Numbers Say
If you dig a bit further into the CBO numbers, they get a bit staggering. As of June, roughly 43 million Americans are the owners of $1.6 trillion in federal student loan debt. The student loan forgiveness plan will essentially wipe out an estimated $430 billion.
Joe Biden had extended the pandemic moratorium on student loan payments, which were scheduled to restart at the end of August, but now have been pushed back to Dec. 31 of 2022.
With all loans come interest, and student loans are no exception. The total interest payments of outstanding student loans was estimated at around $20 billion according to the CBO report.
There are around 37 million Americans who also have direct federal loans and not only do 95% of those borrowers meet the income eligibility requirements, but of those, roughly half would see the entire amount of their student loans erased.
JUST IN: Congressional Budget Office confirms US President Joe Biden’s executive actions cancelling some student loan debt will cost about $400 billion, and “increase inflation substantially”.
— Vinco (@CryptoVinco) September 26, 2022
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Most Democrats Cheered Plan
The majority of Joe Biden’s party cheered the plan when it was announced last month. The progressive wing of the Democrats had been pushing Biden to come up with a plan for a while, including Senators Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer. Both had lobbied for as much as $50,000 of debt per borrower wiped out.
Warren tweeted out, “Make no mistake: This is one of the biggest acts of consumer debt relief in American history, and it will directly help hard-working people who borrowed money to go to school because they didn’t come from a family that could write a big check. Today is a win — and it paves the way for even more victories to come, if we keep fighting side by side.”
We’ve been working towards this day for a long time, and it’s here: President @JoeBiden is taking historic action to cancel up to $20,000 of debt for millions and millions of Americans.
— Elizabeth Warren (@ewarren) August 24, 2022
A joint statement from Warren and Schumer read in part, “With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers. The positive impacts of this move will be felt by families across the country, particularly in minority communities, and is the single most effective action that the President can take on his own to help working families and the economy.”
Republicans such as Senate Majority Leader Mitch McConnell (R-KY) blasted the move, posting on his website:
“President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt. This policy is astonishingly unfair.”
Senator Ted Cruz may have called it exactly what it is, calling it “a Hail Mary before midterms.”
Insane – and illegal!
We have the highest inflation in 40 years/highest gas prices ever, but Biden wants to spend even more at the expense of hard-working Americans.
The middle class will be stuck with the bill – it’s debt transfer.
This is just a Hail Mary before midterms. https://t.co/tJi6yoiztU
— Senator Ted Cruz (@SenTedCruz) August 24, 2022
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A Few Problems
There are a few problems with Biden’s student loan forgiveness plan. In July before the plan was ever announced, House Speaker Nancy Pelosi stated that Biden did not have executive authority to implement such a plan. At the time she stated, “The president can’t do it. That’s not even a discussion.”
However, Schumer said “All you need is the flick of a pen.”
For those who played by the rules and paid their loans off, the Democrats seem to be saying too bad for you. A now famous video of a dad who confronted Warren about loan forgiveness and stated that he had saved money for his daughter to go to school and therefore did not have any outstanding loans, has seemed to say what the Democrats think of your playing by the rules.
Flashback to 2020:
Voter: “My daughter is getting out of school. I saved all my money. She doesn’t have any student loans.”
Warren: “God bless, you!”
Voter: “Am I going to get my money back?”
Warren: “Of course not.” pic.twitter.com/8KPshqeFLi
— Philip Melanchthon Wegmann (@PhilipWegmann) August 24, 2022
Americans who did not take on debt and didn’t go to college will ultimately foot the bill with their tax dollars for those who did. Those Americans are calling Joe Biden’s pre-midterm gift to those who do have student loans what it is, wealth redistribution.
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