I recently wrote a commentary critical of President Biden’s school loan forgiveness plan. New reports reveal it is worse than I even explained.
Biden includes loans from parents through some “parents-plus” deal. As I see it, the parents can have their loans reduced by $20,000. But here is the catch. The determination of eligibility is based on THE STUDENT’S INCOME.
In case you have not connected the dots, that would mean parents with huge incomes can get the loan reduced based on the income of their kid – who could be a couch potato living off mommy and daddy (as was John Fetterman, the Democrat gubernatorial candidate in Pennsylvania until he was elected Lt. Governor. Reports say he got an allowance for more than $50,000 per year from his folks. But I digress).
I previously covered the more than three hundred million Americans who will NOT be benefiting – but who will be footing the bill for the less than ten percent of the population who will supposedly be benefiting.
So, why did I say “supposedly” be benefiting? Weeell … the benefit may not be all that Biden and the Democrats claim.
Biden – with his habit of hyper hyperbole (I did not want to say “bullshit”) – says that because of his canceling a portion of the student loan debt, folks will have money to do other things like buying a home. (Yep! That is what he said.)
Let us say you are making less that $125,000 per year – and you have a student loan obligation of $100,000 that you are paying off at the five percent interest rate. You have 20 years to pay it off. That gives you a payment of approximately $791 per month.
After Uncle Joe — I mean Uncle Sam – reduces your loan to $90,000, your monthly payment drops to $718 per month – or saving of a whopping $73 per month. That would not cover a mortgage on a birdhouse.
Even if Biden were to give them the entire amount up front, a low-income renting individual would not be able to afford a house. No doubt it will be a nice one-time piece of change to pay off a few credit card bills, but the economic benefit will be fleeting. A year from now, the lives of the recipients will not have changed because of the money.
This is a one-time election-year goodie for a few folks but does nothing to address the ongoing problem of robber baron tuition increases. As one commentator put it, Biden is using a small bucket to bail out a boat without addressing the gaping hole in the hull.
And then there is the cost of the program – and its impact on inflation – when asked about the cost, Secretary of Education Miguel Cardona said … he did not know. They have not figured it out yet.
Cardona said the income from the rest of the student loan income would cover the costs. That is just stupid and dishonest. He might as well have said that Social Security income would cover the cost. No. The cost is the cost – and there is no counterbalancing income to offset it. That is why economists call Biden’s action inflationary.
It is not just the Republicans complaining. Tim Ryan, the Democrat Senate candidate in Ohio, has come out against the plan. President Obama’s economic advisor Jason Furman called Biden’s action both “reckless” and “inflationary.”
Furman tweeted, “Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless. And doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”
Biden and left-wing Democrats are selling a lot of sizzle but are not producing any bacon for anyone.
So, there ‘tis.
