Almost all of the media attention and debate around President Biden’s student loan forgiveness executive order has been focused on past and present students who currently have student loans—what’s referred to as a one-time loan forgiveness (or debt cancellation).
But what about the high school junior or senior who hopes to go college in the fall of 2023 or 2024? Can that person expect to have his or her future loans forgiven?
Almost certainly—if Biden and progressive Democrats get their way.
Biden’s executive order does not imply loan forgiveness in the future. But it does propose “a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income.”
However, since progressive Democrats, who are the ones driving the Democratic agenda these days, want to make college free (i.e., taxpayer-funded) for everyone, the safe bet is that Biden will be back to forgive future debt, either by legislation or, more likely, by fiat. Especially if he thinks that will help him win reelection in 2024.
That is, if he gets away with this initial debt-forgiveness scam.
Economists using the Penn Wharton Budget Model looked not only at Biden’s one-time loan forgiveness scheme, but over the customary 10-year budget cycle. [See Table 1 from this document here.]
As the table shows, the model estimates the one-time, debt-cancellation cost to taxpayers of $486.6 billion in 2022. But there is a recuring cost of between $5.0 billion and $6.4 billion per year through 2031, for a total of $519.1 billion.
As the modelers explain, “The $468.6 billion cost in 2022 corresponds to loans only for students who have separated from eligible post-secondary education and no longer have their debt payments deferred. The $519.1 cost over the 10-year budget window includes students currently enrolled in college with loan deferral status as well as future students during the budget window.” (Emphasis added)
And that’s only if future students get the same deal that Biden proposes for current students.
However, the real goal is to expand the program so that the government (i.e., taxpayers) pays for all college, just as the goal is for the government to pay for all health care.
Obamacare and Medicaid expansion were part of progressives’ one-step-at-a-time approach to achieving universal, government-run health care. Biden’s loan forgiveness ploy is part of progressives’ one-step-at-a-time approach to achieving universal, government-run education.
September 13, 2022