The Biden Administration announced a student loan forgiveness program on Wednesday. The program will forgive $10,000 in student loans for people who make less than $125,000 per year and $20,000 for those who used Pell Grants.
Usually loan forgiveness is taxed as income but the administration will allow this loan forgiveness to go untaxed. The White House says that this means about 15 million people who have a balance of $10,000 or less would see that wiped away from their balance sheet.
That is nice for some but it is not nice for all. According to the Penn Wharton model, this will cost taxpayers $329 billion over the next 10 years. It also clearly upsets people who either paid off their own loans through extreme sacrifice or chose not to go to college to avoid debt.
Also, does it prevent future students from taking on debt? No. Does it provide an underwriting system to help student loans be less predatory? No. Does it change the loan system so that it can be discharged by bankruptcy? No. Does it mean that universities will keep costs down? No. So it’s one-time assistance to people with student debt? Yes. Okay then.