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  • Writer's pictureJoanne Jacobs

Biden: $10,000 break on college loans

President Joe Biden will cancel $10,000 in student loans for those earning less than $125,000 a year and extend "the pandemic-era pause on loan payments through the end of the year," reports the New York Times. "In addition, those with undergraduate loans would be able to cap their payments at 5 percent of their monthly income, a change that could significantly reduce bills for millions of borrowers."


The 13 percent of Americans with college debt earn more than other Americans, on average.

Ninety percent of the relief will go to households earning $75,000 a year or less, the White House contends.


It will cost taxpayers $300 billion or more in unpaid loans.


While some on the left will be unsatisfied, others say canceling loans forces working-class taxpayers to subsidize the more advantaged, and raises inflation for everyone.


Loan forgiveness fuels inflation and alienates the non-degreed majority, writes Ben Ritz, director of the Progressive Policy Institute’s Center for Funding America’s Future, in The Hill.

Although the administration may think that limiting debt cancelation to borrowers who earned less than $125,000 last year helps limit giveaways to the wealthiest, it’s still a regressive transfer of wealth. Many people who fell under the income limit last year will still have lifetime incomes far above average, such as a recent law or medical school graduate who is just beginning their career. And whether it’s through inflation today, or higher taxes and spending cuts tomorrow, workers who don’t reap the income benefits of a college education will bear the costs of canceling debt for those who do.
. . . the move is likely to backfire with the overwhelming majority of workers who lack college degrees and suburban voters concerned about inflation and government overspending.

The moratorium on interest has effectively canceled roughly $6,000 per borrower to date already, writes Ritz. The administration has provided additional forgiveness to targeted borrowers.


"Democrats have an image problem already, and this confirms the stereotypes, writes Jeff Maurer in The Atlantic. "We’re seen as the party of urban elites — pampered, overeducated dweebs, soft-handed dandies who ride scooters without embarrassment and name our pets after jazz musicians."


A former EPA speechwriter and writer for John Oliver, Maurer writes the newsletter I Might Be Wrong. Like Ritz, he is a progressive.

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9 Comments


lady_lessa
Aug 25, 2022

What amazes me about it is the high income cut off to get the forgiveness. If it were average $50,000/year averaged over 4 or 5 years including the Covid years, I might be slightly happier about it.


But, then probably not. I don't want to pay for useless degrees for folks who chose them.

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Guest
Aug 25, 2022

I have an idea, you get your student loan completely forgiven...


  1. Your degree is revoked and is reflected as so on official transcripts

  2. A permanent mark is entered on your credit history


All people see is "I took out loans for a college degree of questionable

return on investment and I don't make enough money" so I get bailed out.


You take out a car loan, and you don't make the payments, the car gets repo'd

and you don't make the payments on a mortgage, you get foreclosed on.


Alternative is to amend federal bankruptcy law to discharge student loans

via that process, but that also winds up for 7-10 years on a credit report.

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Guest
Aug 25, 2022
Replying to

About 50% of student loans are held by people who never graduated.

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Guest
Aug 24, 2022

Fingers crossed that they'll make this retroactive by about two or three decades!

/s

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rob
Aug 24, 2022

Where's my $10,000 of free government money?


This is such a bad idea that I am tongue-tied. "Hmmm... how can we slow down inflation? I know! Let's inject $300 billion into the economy and see if that helps!"

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Guest
Aug 24, 2022

"While some on the left will be unsatisfied, others say canceling loans forces working-class taxpayers to subsidize the more advantaged, and raises inflation for everyone."


'Others' say this? Anyone who's honest, whether they agree with the policy or not, should say this.

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Guest
Aug 26, 2022
Replying to

Syntactically, that's exactly it. "Some on the left ... , others [on the left] say..."


What some and/or others on the right might feel and/or say is not worth repeating or reporting upon.

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