Biden Refuses to Expand Student Loan Forgiveness
CNN reported that President Biden reiterated his intention to forgive $10,000 of federal student loan debt as part of pandemic relief, despite calls from many Democratic members of Congress to increase the forgiveness to $50,000.
The issue is big. SavingForCollege.com reports that 45.1 million borrowers held $1.6 trillion in student loans in 2019, with an average balance of about $35,000. People who have large loan balances relative to income are not buying cars, furniture or houses, putting a drag on the economy.
Biden seems to have two concerns. The first is ensuring that the forgiveness goes to people who actually need it. There is a difference between someone who borrowed money to pay for a degree in education and now teaches in a low-income school district and someone who used student loans to get an MBA at Harvard and goes to work for a hedge fund.
Also, no one wants to encourage colleges to raise tuition prices under the assumption that forgivable loans will be available to cover the increase.
Biden’s second concern about increasing student loan forgiveness is that he seems to believe that this should really be a legislative decision, which is not a surprise given that most of his political experience is legislative. That would allow for a hashing out of some of these issues and lead to more permanent policies.
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