Proponents of so-called “student debt cancellation” typically paint it as much-needed relief for struggling Americans. In reality, it’s a taxpayer-financed bailout for relatively affluent college graduates. (Who, in a pure coincidence, overwhelmingly vote Democrat).
You don’t have to take my word for it. We just got more stunning proof that this policy mostly benefits the well-off.
First, some background facts.
The Student Debt Situation
Almost all of the US’s $1.7 trillion in student loan debt is owed to the federal government (aka federal taxpayers), not private banks. When the COVID-19 pandemic first began, the feds decided to pause payments on student loan collections to help anyone struggling. (Yes, this started under former President Trump!) This might’ve made some sense at the very beginning, but it’s still in place today despite college graduates having fully recovered from the pandemic, now having just a 2.2% unemployment rate.
Meanwhile, the “pause” on student loan payments costs taxpayers real money.
The Student Debt Pause Has Real Costs
According to the nonpartisan Committee for a Responsible Federal Budget, federal taxpayers lose $4.3 billion every month the policy remains in place. (Payments are still eventually owed, but revenue is nonetheless lost due to waiving of interest that won’t be collected later.) That’s taxpayer money in the federal budget. It ultimately will need to be made up elsewhere through higher taxes, more money-printing fueled inflation, or more crushing federal debt.
And the pause has mostly benefitted doctors and lawyers, the Committee reports in a new analysis. (They often have lots of student loans).
Per this analysis, by May 1 the pause will have given a typical recent medical school graduate $50,000 in permanent debt cancellation. It will have given an average recently graduated lawyer $30,000 in relief.
That’s right: The supposedly “progressive” student debt pause during the pandemic has mostly benefited doctors, lawyers, and those with advanced degrees. All at the working-class taxpayer’s expense…
🚨NEW ANALYSIS🚨 The government has 𝐚𝐥𝐫𝐞𝐚𝐝𝐲 cancelled $50,000 of student debt…for doctors.
Lawyers got $30,000 of debt cancelled.
The student debt pause is highly regressive.https://t.co/ErUEAPe6vl pic.twitter.com/L8Kvt2FKIh
— Marc Goldwein – GET VAXXED! (@MarcGoldwein) March 17, 2022
The Takeaway: This Inequality is a Feature, Not a Bug
Suffice it to say that this policy is offering relief to those who least need it at a time when everyday taxpayers can least afford it.
This analysis should put the nail in the coffin on any talks within the Biden administration about extending the “pause” past its current May 1 expiration date. Yet it also reveals the most glaring problem with the student debt cancellation movement overall.
Canceling student debt sounds progressive, but is actually a taxpayer bailout for the affluent.