Following the first federal lawsuit against the Biden administration’s student loan debt bailout plan, “The Squad” held a Capitol Hill press conference to advocate for a “swift and equitable implementation of President Biden’s student debt relief plan.” Also, six Republican-led states sued the administration Thursday in an effort to halt the bailout plan.
Once again, liberal lawmakers are pushing for policies that will ensure taxpayers are footing the bill for the left’s runaway spending policies. The University of Pennsylvania’s Wharton School of Business estimates that President Joe Biden’s student loan forgiveness proposal, which promises $10,000 in debt relief for students who did not receive a Federal Pell Grant, and $20,000 for those that did, could cost taxpayers more than $1 trillion over 10 years in new tax burdens.
Unfortunately, blue-collar workers without college degrees can expect to be saddled with a large portion of the burden of paying back the higher government debt generated by this regressive transfer of wealth from college graduates to taxpayers.
In other words, even the use of the phrase “student debt forgiveness” is misleading because the debt does not simply vanish into thin air. On the contrary, the proposed debt forgiveness comes at the expense of taxpayers, as the government loses the stream of loan repayments and must instead resort to more borrowing on its own to finance itself. In other words, student debt forgiveness is, in reality, a regressive student debt transfer.
At a time when the average American family has already lost more than $6,800 in purchasing power from inflation — representing more than 10% of total gross household income for many American households — this student debt bailout will add an estimated $2,500 debt burden to the average taxpayer, which is quite substantial given that the average blue-collar worker earns $37,160 a year, not to mention the 20 million Americans who cannot afford their energy bills because of rampant inflation.
By contrast, college graduates earn over $30,000 more per year on average than their blue-collar counterparts. It is worth remembering that although college costs and student debt have risen too quickly, the typical student leaves college with less than $25,000 in debt. Considering that, over the course of their entire career, college graduates make upwards of $1 million more than blue-collar workers, it is clear that they can and should be the ones to shoulder the burden of their education, with any relief policies targeted just to those with extreme hardship.
Notably, JP Morgan and Chase Co. reported that out of all of the student debt forgiven by the Biden administration, only 15% of debt forgiveness would go to those earning income in the second quintile ($34,000-$58,000 annually).
These actions by the Biden administration amount to a reverse Robin Hood operation, helping those who need debt relief the least and saddling it upon those who have suffered the most from the Biden administration’s out-of-control inflationary spending.
Those who consciously chose not to attend college, or to take on any debt obligations, will now shoulder the additional tax burden that debt forgiveness will inevitably require.
The only solution to alleviate the burdens that middle and lower-income Americans are facing from the runaway spending of the current administration is a return to the policies that benefited Americans across the board. American taxpayers desperately need relief from inflation, and this relief must be brought about by enabling the American economy to function with proper regulatory incentives and policies.
Blue-collar workers and struggling families throughout the country desperately need a return to the America First economic policies championed by the Trump administration that advanced their interests and safeguarded their prosperity. More big government spending, tax hikes, regulations and reverse Robin Hood policies will achieve the opposite by putting the country on the path to even worse stagflation.
David Vasquez serves as a Policy Analyst in the Center for American Prosperity and Center for Energy and Environment at the America First Policy Institute.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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