The White House’s plan applies to individuals earning less than $125,000 per year, while those who paid for college using Pell Grants are eligible for a $20,000 loan cancellation. Biden also decided to extend the pause on federal student loan repayment to January 2023 and will permit borrowers with undergraduate loans to cap payments at 5% of monthly income.
Senate Minority Leader Mitch McConnell (R-KY) said in a statement that the commander-in-chief’s “student loan socialism” is “astonishingly unfair.”
“The median American with student loans already has a significantly higher income than the median American overall,” the lawmaker noted. “President Biden’s inflation is crushing working families, and his answer is to give away even more government money to elites with higher salaries. Democrats are literally using working Americans’ money to try to buy themselves some enthusiasm from their political base.”
“Grossly unfair to families who didn’t send their kids to college or managed to pay off their student debt,” Sen. Ron Johnson (R-WI) added. “Democrats have become the party of the elite.”
Biden’s move to eliminate $10,000 of debt per borrower would cost $298 billion in 2022 and a total of $329 billion by 2031 should the policy be renewed every year, according to a nonpartisan analysis from the University of Pennsylvania’s Wharton School, which also indicated that 42% of the benefit from the policy would reach those earning more than $82,400 per year.
“President Biden’s decision to waive student loan debt will increase inflation and is another gift to the rich,” Sen. Marsha Blackburn (R-TN) remarked. “Tennesseans should not be forced to pay for coastal elites to get their PhD in gender studies.”
Beyond predominantly benefiting wealthier individuals, 59% of Americans are concerned that student debt cancellation “will make inflation worse,” according to a new survey from CNBC. While 30% said that no student debt cancellation should occur, only 19% of adults between 18 and 34 years old maintain such a position.
“President Biden isn’t ‘canceling’ debt, he’s shifting it onto everyone, including the majority of Americans who chose not to get a degree,” Sen. Mike Braun (R-IN) observed. “This will make inflation worse, and we should focus on getting more value out of colleges rather than giving them a reason to hike prices.”
Indeed, the Wharton analysts noted that a permanent loan cancellation announcement could lead students to “eventually reorganize their financing toward additional borrowing.” Although the policy may also increase access to higher education among students who would not otherwise be able to afford degrees, universities themselves could capture the added value “in the form of higher prices” as they raise tuition.
“President Biden’s plan to cancel student debt is no compassionate ‘freebie’ for Americans,” Sen. Tim Scott (R-SC) said. He called the move an “economic burden placed on lower and middle class families in the midst of a recession.”
Average private university tuition is currently $43,775, and average in-state public university tuition is $11,631, according to data from U.S. News and World Report.