White House officials had been weighing the move for months before officially landing on the $10,000 figure. Biden also decided to extend the pause on federal student loan repayment to January 2023, while borrowers with undergraduate loans can cap repayment at 5% of monthly income.
“Is it unfair to people who paid their student loans or chose not to take out loans?” a reporter asked Biden.
“Is it fair to people who, in fact, do not own multibillion dollar businesses, to see one of these guys give them all the tax breaks? Is that fair?” Biden snapped back. “What do you think?”
Another reporter asked Biden, “What about people who paid their loans though, struggled to pay their loans and now others don’t have to?”
Biden refused to answer the question and walked out of the room.
Biden is asked, “Is this unfair to people who paid their student loans or chose not to take out loans?”
He has no answer. pic.twitter.com/VbzUSFGnIR
— RNC Research (@RNCResearch) August 24, 2022
Nixing $10,000 of debt per borrower would cost $298 billion in 2022 and a total of $329 billion by 2031 if the policy is renewed each year, according to a nonpartisan analysis from the University of Pennsylvania’s Wharton School. Less than 32% of the funding would benefit Americans in the two lowest income quintiles, while 42% would benefit those earning more than $82,400 per year.
Indeed, a report from the Brookings Institution observed that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owed by the bottom 20% — likely because graduate degrees are often necessary for the most lucrative professions.
The policy may offer additional distortions as potential borrowers consider the possibility of future bailouts. “If student loan debt forgiveness is ongoing, students might eventually reorganize their financing toward additional borrowing,” the Wharton economists explained.
A new survey from CNBC shows that 59% of Americans are worried that student debt cancellation “will make inflation worse.” Nixing student debt is particularly popular among the young — while 30% of overall respondents said that no cancellations should occur, only 19% of adults between 18 and 34 years old maintain such a position.
Ben Zeisloft contributed to this report.