Today, the Texas Public Policy Foundation condemns the decision by the Biden administration to pursue broad-scale student loan forgiveness, welfare for the rich that will not fix the student debt crisis. Badly targeted loan forgiveness, while harming the economy through increased inflationary pressures, will only encourage the harmful practices that have created a $1.6 trillion student loan balance.
“Biden’s student loan forgiveness plan, outside of being incredibly expensive and likely to lead to more inflation, will only exacerbate the student loan debt problem. An estimate using the Penn Wharton Budget Model finds that the poorest 20% will receive less than 12% of all benefits from the Biden plan, rendering this plan mostly welfare for the wealthiest Americans,” said Andrew Gillen, senior policy analyst for TPPF’s Next Generation Texas initiative.
“Instead, Congress should pursue a student loan system that relies on private, income-contingent lending that ensures competition among lenders, rather than the current system of federal loan guarantees that have allowed student debt to spiral out of control. Forgiveness will only lead to more costly forgiveness measures every election year, rather than fixing the underlying problem.”
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