You watched last week as Biden administration Press Secretary Karine Jean-Pierre furiously attempted to avoid giving reporters an estimate of costs for their new plan to give away money to anyone who was unfortunate enough to go to college and pay for it with someone else’s money. Thankfully (and frighteningly) Neal McCluskey has been using publicly available information to make his own estimates of the cost, and they are shocking. He writes at Cato Institute:
Yesterday, I assembled my top five reasons to oppose mass student debt cancellation in anticipation of the Biden administration announcing a plan today. The plan is somewhat different from what I expected, and worse than I feared.
All but one of my reasons yesterday applies to the proposal the White House put out today. Number two – cancellation would be skewed to higher‐income borrowers – no longer applies.
As expected, Biden will cancel $10,000 for all federal student debtors up to joint filers earning $250,000. That includes, by the White House’s own admission, basically all but the 5% of top‐earning households. The big addition is that Pell Grant recipients who also have student loans will get up to $20,000 in debt cancelled. Based on a very rough, preliminary estimate of the share of student debtors who received Pell and their earnings, that changes cancellation from disproportionately helping higher‐income debtors to lower.
Meanwhile, my rough new estimate is that the cost to taxpayers will be $427 billion. To put that in perspective, it is more than the gross domestic product of Hong Kong and 182 countries. For those who support federal social programs, it is nearly 36‐times greater than the federal government spent on Head Start in 2022. And if you support defense spending, it is nearly two‐and‐a‐half times larger than the U.S. Army’s 2022 budget. And this, by the way, does not include non‐cancellation elements of the Biden announcement, including proposals to significantly cut many borrowers’ monthly payments and more generous loan forgiveness in the future.
Action Line: Why can’t the Biden administration answer even basic questions about the student loan giveaway? The hard-working Americans who are being forced to pay for Biden’s giveaway deserve answers. You deserve to keep your money and save your money. If you need help, click here to get in touch. Until then, subscribe to my free monthly Survive & Thrive letter, and we’ll weather this storm together.
