Incidentally, he also broke a campaign promise that programs in his administration would be paid for.
Biden’s announcement drew criticism from both sides of the aisle—progressive Democrats wanted up to $50,000, while Republicans panned it. Student loans are not discharged in bankruptcy so they can be millstones around the heads of graduates who borrowed heavily. That’s particularly true for those who borrowed for under-graduate and graduate degrees in the social sciences that do not offer clear career paths to six-figure salaries. That universities offer these loans for these programs are committing consumer fraud.
Neither Biden nor an of his senior administration officials would give any cost estimate. Penn Wharton put it at $300 billion, while others have estimated up to $600 billion.
College costs have soared, particularly since the government got into the loan business in the early 1990s. From 1977 to 2022, inflation averaged 3.54%, while college costs soared by a 6.28% rate annually. That amounted to a 1,448% increase over those 50 years. I graduated from UC Berkeley in 1975 and I recall I paid $232.50 per quarter or under $700 per year=that did not include room and board. Those fees are $14,426 this fall.
The Biden move enables highly-regarded universities to keep raising fees, although second tier institutions are struggling in the post-Covid environment. It also amounts to shifting payment burden from those “successful” college grads to the rest of the taxpayers—parents and students who paid their loans in full and those who didn’t go to college.
It’s dramatically unfair—not that the fact matters to the president and the Dems.
Here’s what Jason Furman, Harvard professor and former chair of President Obama’s Council of Economic Advisors, tweeted, it “benefits recent college graduates and hurts most everyone else, rich and poor. Student relief is not free. It would be paid for. Part of it would be paid for by the 87% of Americans who do not benefit but lose out from inflation. Part of it would be paid for by future spending cuts (and) tax increases—with uncertainty about who will bear those costs.”
In another tweet, he wrote it was pouring gasoline on the inflation fire.
In regard to my Tuesday comment about spins from the Biden Administration, did you see this one from Jennifer Granholm, the erstwhile secretary of energy, former governor of Michigan and in-between a professor at Cal (ugh)? Speaking on Fox News Sunday, she said lower and middle class Americans could fight the worst inflation in 50 years by spending thousands for solar panels and other green energy products. She was trying to defend the absurdly named “Inflation Reduction Act” and explain how Americans struggling with inflation, gas prices that have more than doubled as well as other soaring energy costs could make ends meet.