Biden’s College Forgiveness Will Bring Debt Back to $1.6T in a Decade

Ahead of Mr. Biden’s announcement last month, there was $1.6 trillion outstanding student loan debt. That could fall to $1.1 trillion if all eligible borrowers opt for debt forgiveness. The plan gives $10,000 in loan forgiveness to anyone who makes $125,000 or less. It gives $20,000 to Pell grant recipients.

But the Committee for a Responsible Federal Budget, a nonpartisan fiscal responsibility advocacy group, estimates the overall student debt portfolio will return to $1.6 trillion by 2028. Adjusted for inflation means that student debt would return to its current level by 2031.

That estimate assumes there will be on change in borrower behavior. Still, the CRFB estimates that student loan borrowing will increase over the next decade because colleges are expected to increase tuition in response to Mr. Biden’s plan.

“Any behavioral changes would mean the portfolio would return to its current size even faster,” the report says.

CRFB estimates the lower balance resulting from debt cancellation would reduce the pace of repayment. That would exacerbate growth because interest would accrue on new loans that would not be paid back at the same pace, and those loans would be for higher amounts because of increased tuition.

The organization said that instead of blanket loan forgiveness, Mr. Biden should have focused on policies that lead to less borrowing or better outcomes for borrowers. It concluded that Mr. Biden’s plan would lead to more borrowing and higher tuition.

Mr. Biden has insisted that his plan will help Americans climb out of debt and advance the economy by having more money to buy a home or start a business.

No one believes that. Even some members of Biden’s own party have been critical.

As we reported, the college loan forgiveness program is much worse than even that.

THE CATASTROPHIC IDR

Biden (Democrats) is planning a new income-driven repayment (IDR) system for college borrowers.

Reason’s Robert Soave said it would be “catastrophic.” The CRFB also addressed it.

According to the Biden-Harris debt relief plan, borrowers will pay just 5 percent of their income (or 10 percent if they took out graduate student loans) for either 10 or 20 years, depending on how much money they owe. The income threshold will be raised from 150 percent above the poverty line to 225 percent, and punitive interest rates will be eliminated.

The IDR gives universities and students an incentive to put the entire burden on the taxpayers. That is the goal. Students can borrow without concerns, and universities can keep raising tuition.

“By encouraging students to take on even more debt, and then never expecting them to repay it, the Biden administration is creating a system where everyone involved in higher education has the incentive to fleece the American people,” Soave concludes.

IDR is a win-win for the Left. Everyone goes to college to be indoctrinated in hard-left ideology. And far-left ideologues get rich as the middle class evaporates.

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