Even as student loan payments were finally allowed to resume after more than three years, the Biden administration recently announced yet another $9 billion in student loan forgiveness. For taxpayers concerned about how a total of $204 billion in loan forgiveness under President Biden will affect the out-of-control national debt, fear not — apparently it benefits everybody and hurts nobody!
At least, that’s according to a tweet by the official White House Twitter account. The tweet responded to a report on the growing cost of student loan forgiveness to taxpayers by claiming, “Guess what? It also grows the economy. Benefits everybody. Hurts nobody.”
That’s a very hard claim to take seriously. While the White House claims that it has forgiven $127 billion in student loan debt, the Committee for a Responsible Federal Budget (CRFB) estimates that the total cost is $204 billion (including the $9 billion in additional forgiveness). Factoring in $69 billion in additional interest obligations, that brings the total cost to taxpayers to $273 billion.
The total $204 billion price tag works out to an average of over $2,525 for each of the roughly 108 million taxpaying households in the United States, a cost that cash-strapped taxpayers are hardly equipped to bear. And while that price tag is taking the form of new debt for now, the fact that the bill is just being kicked down the road should be of little consolation to taxpayers.
After all, with a national debt well in excess of $33.4 trillion (a staggering $309,000 on average per each of those aforementioned taxpaying households) and rising, claiming that piling tens of billions in additional debt on taxpayers “hurts nobody” is insulting to the taxpayers bearing the cost.
But while the “hurts nobody” part of the White House’s claim is clearly wrong, the idea that student loan forgiveness “grows the economy” and “benefits everybody” is also highly questionable.
Throughout the pause on student loan repayments, the majority of the benefit has clearly gone primarily to Americans who took out big loans to pursue lucrative careers. CRFB estimates that 70 percent of student loan debt is held by just a quarter of borrowers — borrowers who benefit most from student loan repayment pauses because they often have high interest rates. While student debt cancellation advocates often conjure images of bachelor’s degree holders buried under mountains of debt, a majority of borrowers owe less than $20,000.
After all, the greatest mounds of student debt are often accrued by students who earn M.D.s, J.D.s or Masters degrees. While these are expensive degrees to acquire, they lead to very high career earnings that more than pay for themselves. There’s no good reason for the Biden administration to make taxpayers do it for them.
And the biggest chunk of Biden’s newest handout to borrowers takes the form of the Public Service Loan Forgiveness (PSLF) program. While the idea of this program is to reward borrowers for spending time in public service, it often results in massive loan debts being forgiven for a small amount of taxpayers with advanced degrees (and correspondingly large earning potential).
Adding to the general sense of indifference to how taxpayer dollars are being used to benefit borrowers, the top government spending watchdog recently came out with a report about the risks of fraud in student loan forgiveness programs. Want to know what’s in it? Me too — it’s apparently bad enough that it’s being kept top secret.
It’s past time for the Biden administration to recognize that while no one likes paying their student loan debt, it’s no less unpleasant than paying taxes. Maybe instead of student loan relief, the President could consider some relief for taxpayers.
Andrew Wilford is a senior policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax and fiscal policy research and education at all levels of government.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.