President Biden is going to force every American taxpayer to pay off $10,000 of student debt for individuals making less than $125,000.00 a year or $250,000.00 for couples.
The upfront cost of this debt transfer from private citizens to the taxpayer will exceed all the inflationary reductions made in the Inflation Reduction Act. It will not only make inflation worse but will inflate college prices by providing a disincentive for colleges to rein in their tuition increases.
President Obama’s own economic advisor noted on social media that the plan will increase inflation by at least a quarter percent. The University of Pennsylvania’s Wharton School estimates the plan will cost each taxpayer in America $2100, and the full cost will be $300 billion.
Progressives say taxpayers are not actually going to owe the money. Actually, taxpayers already paid the money to colleges on behalf of college students.
Those students, in turn, contractually, voluntarily obligated themselves to pay the taxpayers back with interest. Forgiving that money means the taxpayers will not see a return on their advance.
The government will have to cover that deficit by raising taxes, cutting government services, or adding to the national debt. The latter will be the easy way out. That will increase debt service payments and reduce services from the federal government over time, hurting the poor.
It is profoundly immoral and will exacerbate future student debt problems and create deep moral hazards as colleges will have an incentive to get students into further debt for further bailouts. There is no incentive for colleges to cut costs now. After the Inflation Reduction Act gave taxpayers a $7500 tax credit for electric vehicles, Ford Motor raised the price of the new electric F-150 pickup truck by roughly that amount. Other automakers followed suit. Now colleges will do the same.
College Student are going to find it real hard to get jobs in the Future. They will be labled the Debt Whores by American Society. This will flood over to the Colleges who will have to guarantee loans in the Future.