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Biden student loan plan: What is fair to the borrowers, the taxpayers?

President Joe Biden’s plan to forgive up to $20,000 in student loan debt for millions of Americans represents an attempt to find a middle ground on an issue the administration has wrestled with since taking office.

The central dilemma, both for Biden officials and for the continuing public debate over loan forgiveness, could be summed up with a simple question: What is fair?

why are we writing this

For many Americans, a Biden plan to forgive student debt lightens a millstone weighing down younger generations. Others say the plan is unfair to taxpayers and to previous borrowers who paid in full.

Opponents say that in this case, using all taxpayers’ money to provide targeted relief to a few individuals is not fair at all, since those individuals freely incurred their debt. What about past generations of students who tightened their belts to pay for higher education?

The plan outlined by President Biden at the White House on Wednesday would write off $10,000 in federal student loan debt for individuals earning less than $125,000 a year or couples earning less than $250,000 a year. Additionally, those with Federal Pell Grants, which are awarded to college students with exceptional financial need, are eligible for $20,000 loan forgiveness.

Fairness aside, one lingering question is whether the Biden administration has the legal authority to put such a radical program in place through executive action alone.

President Joe Biden’s plan to forgive up to $20,000 in student loan debt for millions of Americans represents an attempt to find a middle ground on a huge issue the administration has wrestled with since taking office 19 months ago.

The central dilemma, both for Biden officials and for the continuing public debate over loan forgiveness, could be summed up with a simple question: What is fair?

Opponents say that in this case, using all taxpayers’ money to provide targeted relief to a few individuals is not fair at all, since those individuals freely incurred their debt. What about past generations of students who tightened their belts to pay for higher education? And won’t another round of government fiscal stimulus overheat the economy?

why are we writing this

For many Americans, a Biden plan to forgive student debt lightens a millstone weighing down younger generations. Others say the plan is unfair to taxpayers and to previous borrowers who paid in full.

There is some controversy about what the macroeconomic effect of Biden’s plan might be, says Steven Teles, a political scientist at Johns Hopkins University, who cautions that he is not an economist. “But it’s hard to see how he’s not inflationary.”

Supporters argue it’s only fair to help borrowers hit by rapidly rising college costs, falling public investment in schools and, all too often, predatory educational institutions. Targeted loan relief could help alleviate racial disparities in the economy, they say.


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