This past week, the Biden administration shocked the country by announcing its plans to initiate student loan debt forgiveness on a nation-wide scale, the first of its kind in national history.
On Aug. 24th, the White House detailed how the Department of Education will start forgiving student loans, impacting nearly 45 million borrowers who owe approximately $1.6 trillion to the federal government.
Given the fiscal situation the United States has been thrust into in recent years, the decision by the Biden administration to supposedly “forgive” debt has left many wondering how the federal government plans to actually resolve the debt and who will foot the bill.
Democrats’ disregard for a balanced budget and running deficits of trillions of dollars does not really solve the inflation issue, nor does forcing the federal government into more debt. By not allowing citizens to pay back their debt, the government will continue to spend more than it is receiving without raising taxes, which could cause inflation to increase.
“It’s not just ‘government can spend what it wants because it can issue as much money as it wants,’” an article from the Washington Examiner states. ”Excess government spending, particularly if it’s not tied to productivity, can spur excess inflation.”
In addition to causing financial stress, the Biden administration has been silent about whether it will maintain its promise of not covering student loan debt forgiveness through raising taxes. One of the key components of the Inflation Reduction Act was raising the corporate tax rate on corporations who make $1 billion or more. One can only wonder, if Democrats get in a pinch, if they’ll decide to raise taxes on every-day citizens too, whether it be through the Executive Branch or Congress.
Ridding federal student loan borrowers of their personal responsibility and hinting at the fact financially responsible citizens will have to cover others’ financial responsibility is a long shot, even for Democrats and the federal government.
An article from The Federalist states many find student loans can be stabilized and controlled, ”If [they] are willing to a little harder and longer than [their] peers to stabilize cash flow, [they’ll] realize that, far from crushing [their] American dream, student debt is quite manageable.”
A recent Axios article also explains, of those paying student loans, “nearly 90% of those benefiting from the policy earn less than $75,000, according to the White House. Second, a significant percentage of student loan debtors didn’t get a four-year degree. That means they also don’t get the income boost of a bachelor’s degree.”
Biden’s student debt forgiveness also begs the matter of whether or not the federal government should even be getting involved with debt relief in the first place, having trouble paying off its own. Is the federal government covering the cost of financial irresponsibility, or truly relieving struggling families and individuals who have a hard time making payments because of low-income? Democrats, specifically President Biden, gave no thought to this aspect of debt relief.
President Biden needs to tread carefully on the ground of how the government will address the newly-acquired financial problem. With the overt government deficits coming out of Congress’ legislation and putting unnecessary strain on American citizens’ finances, the possible idea of transferring federal student loan borrowers’ debt onto an already financially-stressed American consumer, could be a dangerous one.