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."
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.
"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.