President Joe Biden's student loan forgiveness plan will likely backfire on Democrats in the upcoming midterm elections, a former Trump economic advisor said.
Steve Moore, chief economist of the Heritage Foundation, pointed out that the move could backfire against Biden even with politics aside. He acknowledged that even Democratic Party candidates in some tough battleground districts are adopting a hands-off approach, as they realize that many Americans find the proposal completely unfair.
According to the former adviser, the student loan forgiveness plan was unfair for those who went through the military to pay for college.
"The other group of people – really angry – are people who went through the GI program, and went through our military and protected us and spent three or four or five years in the military, and they get education free because that's the bargain," he explained, adding that the Biden administration is basically giving free education to people who did nothing to deserve it.
Moore added that Biden does not have the legal authority to cancel student debt. He remarked that the Supreme Court may rule against it as the president is using his pandemic emergency powers to allow people not to repay their loans.
The Biden administration has already canceled nearly $32 billion of the $1.6 trillion in outstanding federal student debt by expanding existing forgiveness programs for public sector workers, disabled borrowers and students who were defrauded by for-profit colleges. He also extended the pandemic-related pause on student loan payments.
Still, these actions fell short of the campaign pledge Biden made to cancel student debt on a broader spectrum. He is also facing pressure to do more from other Democrats who are urging him to cancel $50,000 per borrower.
Biden administration to cancel $10,000 per borrower
White House officials are leaning toward canceling $10,000 in debt for every borrower who earns less than $125,000 a year. Earlier this year, then-White House Press Secretary Jen Psaki said the president is using his campaign comments about providing student loan forgiveness for individuals making less than $125,000 a year to frame his current considerations.
Biden's campaign proposal called for immediately canceling a minimum of $10,000 in student debt per person as a response to the pandemic as well as forgiving all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for those borrowers who earn up to $125,000 a year.
If this cancellation policy goes through, roughly 19 percent of households with student loan debt in the U.S. could benefit, according to an analysis done earlier by Matthew Chingos, the vice president of education data and policy at the Urban Institute. His analysis was based on the 2019 Survey of Consumer Finances conducted by the Federal Reserve.
In contrast, 81 percent of households in the same financial bracket that don't have student loan debt would not see any of the benefits that Biden will push with this action. (Related: American household debt now over $16 TRILLION amid rising inflation.)
The White House has long maintained that Biden only supports canceling $10,000 per borrower despite political pressure to cancel $50,000 per borrower. Still, the Penn Wharton Budget Model estimates that it would cost the government around $298 billion.
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Watch Gregory Mannarino explain how debt forgiveness could lead to more debt burdens below.
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