Canceling student loan debt, a recipe for disaster – Greeley Tribune

Congressional Democrats have high hopes for May Day. If President Biden heeds their advice, that would be the day he extends the moratorium on student loan payments that was set to expire.

Of course, this is not enough for progressive pols. In a letter Thursday, nearly 100 lawmakers called on Biden to “deliver meaningful student debt cancellation.” The sum of $50,000 per borrower was proposed.

This has been the Democratic drumbeat – knock out a sizable chunk of the $1.7 trillion in student loan debt and free the financially-stricken people to be able to buy homes, start families – and vote Democratic.

The letter was led by Senate Majority Leader Chuck Schumer, DN.Y., joined by our own Senator Elizabeth Warren, Rep. Ayanna Pressley and dozens of others. A statement from Schumer’s office noted that “most borrowers are not financially ready to take on another bill as they face skyrocketing costs for basic necessities like food and gasoline.”

That’s especially rich, as Democrats’ outrageous spending has helped fuel soaring inflation.

“Cancelling student debt is one of the most powerful ways to address issues of racial and economic equity. The student loan system reflects many of the inequalities that plague American society and widen the wealth gap race,” the lawmakers wrote. “Cancelling student debt must be one of the key actions in your overall approach to advancing equity as our country works to rebuild a stronger, fairer economy. .”

Taking student loans, going to college, and not having to pay would be a great gift for graduates. By getting rid of loan payments, they could save hundreds each month.

It would also be a boon if people who have mortgages, car loans and credit card debt could waive payments without consequences – the money freed up could pay for many quality of life improvements.

But that’s not on the table – adults who get into debt are expected to be responsible and pay for the things they buy.

While lawmakers paint the cancellation of student loan payments as a win-win, the decision is anything but.

As Hill reported, canceling $10,000 per borrower would cost the federal government about $3.73 billion, while the estimated price of eliminating $50,000 per borrower would be nearly $1 trillion. .

Regardless of the amount written off, the government stands to suffer a loss, as federal student loans would cost not only the remaining principal balance, but also the expected interest on all future payments.

A 2019 Moody’s analysis estimated that loan forgiveness could result in $86 billion in lost revenue due to student loan principle, interest and fees.

A report by the Urban Institute also notes that canceling student debt would gradually increase the national debt.

What lawmakers pushing for debt cancellation have missed is that this loss of revenue will have consequences for future budgets. An analysis by Brookings Institution fellow Adam Looney found that any diversion of dollars could divert vital social programs and create higher taxes in the future.

“There are real tradeoffs in terms of — in a sense, there’s a budget, and so the more you spend on one program, the less you have to spend on other programs,” Looney told Changing America.

Canceling student debt is a great way to appeal to the youth demographic so critical to Democratic victories, but the costs, borne by the rest of us, are just too high.

—Boston Herald Editorial Board, March 31

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