Democrats are fighting over the size of their massive multi-trillion dollar spending bill, but that isn't their only intraparty squabble. Congressional Dems and the White House remain at odds over student loan debt forgiveness. Liberal Democrats in the House and Senate are pressuring President Joe Biden to cancel up to $50,000-per person in student loan debt via executive order. The White House says they're willing to forgive up to $10,000, but only if it is first passed by Congress. In the meantime, the Biden administration has already forgiven billions in student debt for people with disabilities and others in certain limited categories.
Regardless of whether it's $50,000 or $10,000, cancelling student loan debt for all borrowers is bad policy either way, according to Rick Hess, director of education policy at the American Enterprise Institute. "It's a terrible idea, a regressive idea," he tells KTRH. "It mostly steers money toward people who went to graduate school or expensive colleges, at the expense of people who didn't borrow a lot of money or who've already paid off their loans."
Hess explains there are already programs in place to help people with low income and hardships in paying their student loans, while this mass loan amnesty would mostly benefit higher-income people who don't need it. "The idea of telling people we're going to give you $10,000 (in debt forgiveness) for free, even if you're making $200,000 or $400,000 a year, is just nuts," he says.
Beyond that, Hess warns this would lead to more debt and irresponsible spending in the long run. "It tells people why should you work or go to a cheaper school...just borrow a lot of money because we won't make you pay it back," he says. "So it actually rewards bad decision-making."
As for the cost of the proposed debt forgiveness, a study by the Brookings Institution estimates eliminating even $10,000 of debt per-borrower, as the White House proposes, would cost $373 billion. "What we're really talking about here is asking taxpayers to fork up enormous sums of money, so people who went to law school or other graduate school programs don't have to pay back their loans," says Hess.