How would Biden’s student loan forgiveness plan impact the economy?
The Daily Wire managing editor Cabot Phillips weighs in on ‘Varney & Co.’
Progressive Democratic lawmakers are moving full steam ahead in their efforts to create policy under a Joe Biden administration to cancel student debt.
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In recent days, lawmakers including Sens. Elizabeth Warren of Massachusetts and Chuck Schumer of New York – as well as members of the so-called "Squad," a group of four progressive congresswomen – have urged the president-elect to consider policy proposals to cancel student debt.
In a Nov. 11 op-ed laying out a number of progressive policy ideas, Biden and Vice President-elect Kamala Harris should tackle once they take office, Warren included the cancelation of student debt among her suggestions.
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"Cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap. This is the single most effective executive action available to provide massive consumer-driver stimulus," she wrote, along with other suggestions, such as declaring the "climate crisis a national emergency" and "establish a Racial and Ethnic Disparities Task Force."
Alexandria Ocasio-Cortez, Ayanna Pressley, Schumer and other progressive Democrat lawmakers have made similar calls.
But the cancelation of student debt does not solve the root of the problem, which is the increasingly high cost of college — especially private college.
Additionally, student debt cancelation could disproportionately benefit the top 40% of American households (those with incomes above $74,000), according to an analysis from the Brookings Institution, a liberal think tank.
According to the Federal Reserve, there are about 45 million borrowers who owe a collective of roughly $1.6 trillion in federal and private student loan debt as of June 2020. That's up from $250 billion in 2004.
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Graduates of private nonprofit and public colleges owed an average of $28,950 in 2019, according to an October report from the nonprofit Institute for College Access and Success.
"What we have in place and we need to improve is a system that says, 'If you cannot afford your loan payments, we will forgive them,'" Sandra Baum, a student loan scholar at the Urban Institute, said at a Brookings Institution forum in October 2019.
"The question of whether we should also have a program that says, 'Let’s also forgive the loan payments even if you can afford them' is another question."
Under Warren's plan to forgive up to $50,000 in student debt for households making less than $100,000, and offer some relief to households that make more than $100,000, 60% of American households would only get 34% of the benefit, according to an April 2019 analysis from Brookings.