But barring an adverse court ruling, young Americans with student debt are now set to receive a five-figure handout. And everyone else is set to pay for it.
https://www.city-journal.org/biden-cancellation-of-student-debt-indefensible
After months of will-he-or-won’t-he suspense, President Biden has announced his executive actions on student debt. The administration plans to cancel up to $10,000 for borrowers currently earning up to $125,000 annually ($250,000 for married couples)—with the maximum forgiveness doubled for the students who, based on their parents’ finances, received Pell Grants when they attended college. Biden will also extend the pause on payments “for one final time” through the end of the year and allow those with undergraduate loans to cap their payments at 5 percent of their discretionary income, as opposed to 10 percent under current policy. Because the “cancellation” is really a transfer, the combined changes will cost taxpayers something like $500 billion—about $1,500 for every person in the United States.
Forgiving student debt may be a savvy way for Biden to appeal to young, left-leaning voters, but it’s indefensible as policy. Beyond the baseline question of whether the government should ever wipe out the willfully assumed debts of a preferred class of Americans at the expense of everyone else, the program is a poorly targeted use of taxpayer funds, rewards the dysfunctions of the higher-ed sector, and is likely illegal.
Yes, the limits placed on the program make it less of a bonanza for the upper-middle class than it could have been. The largest debt loads are typically held by those with advanced, not just undergraduate, degrees, so blanket forgiveness would have been a massive windfall for young lawyers. But the $125,000 income threshold doesn’t come close to targeting the most sympathetic cases: those who were preyed upon by low-quality colleges, often didn’t even earn a degree, and wound up working at the proverbial Starbucks. The median earnings for a U.S. female working full-time and year-round were about $50,000 in 2020; for a male, the number was roughly $60,000. Yet the White House set its cutoff for five-figure handouts at more than twice those amounts—and, citing numbers prepared by its own Department of Education, boasts that 87 percent of the debt relief announced yesterday will go to those earning less than $75,000 in individual income. Even that would be an odd threshold for taxpayer largesse, as it’s above the 2020 median household income and more than triple the 2022 Federal Poverty Level for a family of three. But rest assured: “only” about $65 billion will go to individuals earning even more than that by themselves, at a cost of $200 per U.S. resident.
