Most estimates suggest about 85% of Americans will not benefit from President Joe Biden’s plan to forgive $10,000 in student loan debt for those earning less than $125,000. The plan is called the “student loan forgiveness plan,” but the actual policy is to take private debts from individuals and have the U.S. taxpayer cover them. Eighty-five percent of Americans will not qualify for the plan. Of those who do, the majority already belong to the upper middle class.
The initial cost of this transfer of debt from private citizens to the taxpayer will exceed any inflationary reductions made in the Inflation Reduction Act. This will not only make inflation worse, but will inflate college prices by discouraging colleges from reining in their tuition increases. Former President Barack Obama’s own economic adviser noted on social media that the plan would raise inflation by at least a quarter percent. The Wharton School at the University of Pennsylvania estimates the plan will cost every American taxpayer $2,100 and cost $300 billion.
Progressives say taxpayers aren’t really going to owe the money. In fact, taxpayers were already paying the money to the colleges on behalf of the students. These students, in turn, contractually agreed voluntarily to reimburse taxpayers with interest. Forgiving that money means taxpayers won’t see a return on their advance. The government will have to cover this deficit by raising taxes, cutting government services or increasing the national debt. The latter will be the easy way out. This will increase debt service payments and reduce government services over time, which will hurt the poor.
This is deeply immoral and will exacerbate future student debt problems and create deep moral hazard as colleges have the incentive to take on more debt to secure new bailouts. There is no incentive for colleges to cut costs now. After the Inflation Reduction Act gave taxpayers a $7,500 electric vehicle tax credit, Ford Motor Co. raised the price of the new F-150 electric pickup truck by about that amount . Other automakers have followed suit. From now on, colleges will do the same.
Beyond that, white students tend to have lower student loan balances due to having more financially capable families to help cover tuition. By forgiving $10,000, Biden will actually increase income inequality between races by giving white children a significant advantage over black children who will end up with much higher remaining debt balances.
Also, people who have worked hard to honor their private debts will be discouraged from this hard work. Why spend time and effort when the government is bailing out the irresponsible? In fact, we will bail out the irresponsible and send the IRS to check on the responsible.
Progressive theologians say there is nothing more Christian than forgiveness of debt, but entrusting Christian charity to the government is immoral. It’s especially immoral when you ask the 50-year-old electrician who earns $75,000 a year without a college degree to bail out the 25-year-old lawyer who earns $100,000 a year.
Finally, beyond the non-graduates, there is the class of citizens who have already paid their debts. They saved and saved. They reduced. They fulfilled their obligations. The level of resentment in this country will increase as those who have repaid their debts are forced to cover the costs of those who have not.
It is deeply immoral to transfer the private debts of some onto the backs of all taxpayers, most of whom have worked to pay off their own debts. The sole purpose of this public policy is to reward wealthy, white, college-educated Americans for joining the Democratic Party.
This policy will intensify the trend of non-white working-class voters shifting to the GOP, as they will now shoulder the debts of white kids who got degrees in gender studies and then were shocked not to be able to find jobs. . This policy will amplify racial income inequality in the country. This policy will drive up inflation and tuition fees. This policy is wrong and immoral.
To learn more about Erick Erickson and read articles by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.
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