White House officials are weighing a move to cancel $10,000 of student debt per borrower earning under $125,000, according to a report from CNN. The decision, which is slated to be made public on Wednesday, occurs as the White House also considers whether to extend the present pause on federal student loan payments, which is currently poised to expire on August 31.
However, 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.
The results reflect earlier polling that shows Americans are generally distrustful of the Biden administration’s economic policies. In a survey conducted earlier this summer by CNN and SSRS, 68% of respondents disapproved of Biden’s performance, while a slim 25% supported his efforts to combat inflation.
Meanwhile, 34% of respondents to the CNBC poll believe that “only those in need” should have loans canceled — a slightly higher level of affirmative responses than the 32% who are in favor of student debt cancellation for all borrowers. Indeed, a report from the Brookings Institution explained that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owned by the bottom 20% — partly because graduate degrees are often necessary for the most lucrative professions.
Senate Majority Leader Chuck Schumer (D-NY) — who believes that “all President Biden has to do is flick his pen” to erase up to $50,000 in debt per borrower — also rejects the notion that student loan cancellation is not particularly helpful to lower-income Americans.
“Let’s dispel one awful myth right here: This is not a problem that concerns the wealthy or the Ivy League,” Schumer contended. “All of these fat cats, and people who never want to see help for working people and poor people come up with these myths.”
However, Lawrence Summers — who served as Treasury Secretary under President Bill Clinton and National Economic Council Director under President Barack Obama — argued on Monday that funds for loan cancellation could be better allocated elsewhere.
“The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers,” Summers noted. “If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.”
Summers concurred with respondents to the CNBC survey that student loan cancellation would raise the cost of college and contribute to overall inflation.
“Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college,” Summers explained. “Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.”