STUDY: Wealthy Reap Vast Majority of Benefits from Biden’s Student Loan Giveaway
Don’t buy the Administration's claims that student debt forgiveness benefits low-income families
October 3, 2022 — Biden's Student Loan Giveaway — Blog — Facts Are Stubborn Things — Press Releases — Talking Points
Despite the Administration’s attempts to target low-income borrowers, top earners will still benefit the most from Biden’s student loan giveaway.
Analysis from the Committee for a Responsible Budget (CFRB) found that America’s highest earners will reap nearly two thirds of the giveaway. That means for 87 percent of American adults without student loans, President Biden is sticking them with a nearly $600 billion tab.
As noted by the CFRB:
“In the end, the Administration’s student debt cancellation proposal is costly, inflationary, will drive up higher education costs, and will deliver the majority of the benefits to those in the top half of the income spectrum.”
KEY TAKEAWAYS:
- Top earners benefit the most from Biden’s student loan giveaway, despite the Administration’s efforts to target low-income borrowers. According to the CFRB, “57 percent to 65 percent of the extended pause and cancellation will go to those in the top half of the income spectrum.”
- Even assuming full participation across incomes, highest earners still reap the most financial reward. As noted by CFRB, in order to receive the handout, Americans must fill out an application, “which is likely to be a more significant barrier to lower income borrowers with fewer resources, particularly those who have long been in default or forbearance and are thus detached from the system.”
- Earnings from the last two years are skewed. The pandemic caused even high-income households to report lower incomes than usual, nullifying the Administration’s means-testing efforts. The CFRB goes on to note that those with high earning potential (and therefore are more able to pay off their student debt), such as lawyers and doctors, often take on temporary low-income jobs.
BACKGROUND:
President Biden’s student loan giveaway is a massive transfer of wealth that will worsen inflation.
- Even former Obama-Biden top economic advisor Larry Summers issued a warning that Biden’s mass student loan giveaway will worsen inflation. “‘Student loan relief is not free. It would be paid for. Part of it would be paid for by the 87 percent of Americans who do not benefit but lose out from inflation,’ Summers said.”
READ: Analysis: Biden’s Student Loan Giveaway Would Benefit Highest Earners Most
Pursuing mass student loan forgiveness ignores the real problems most Americans are facing.
- Forgiving $10,000 of student loan debt per person does nothing to bring down inflation.
- Massive student loan forgiveness fails to address the skyrocketing costs of higher education, and instead will only exacerbate it.
- Student loan debt forgiveness will create the expectation of future debt forgiveness and will incentivize students to borrow more not less.
SUBCOMMITTEE: Tax
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