When President Joe Biden unilaterally wiped away some $300 billion in student loan debt, it did nothing to help bring tuition down and make it more affordable for lower- and middle-income Americans. Instead, it incentivized higher education to raise costs even more.
Critics charge that future students will be likely to take on even more debt in hopes of other rounds of loan forgiveness that are sure to be promised.
Furthermore, there are many in the GOP who believe that Democrats will face a backlash in states where the percentage of college degrees is lower. This debt forgiveness may not play well for those who did not have the debt to start with — or faithfully paid off what they took on.
The Committee for a Responsible Federal Budget estimated Biden’s program will cost closer to $500 billion for taxpayers. Organization president Maya MacGuineas further states the program will drive up tuition costs and raise prices on several other goods and services.
Costs of higher education have increased astronomically with no end in sight. Getting a degree from a public college in the early 1970s ran an average of $1,410 annually. Today for an in-state student the yearly bill is $22,690.
Going for a diploma from a private institution ran $2,930 annually in 1971. Fast forward to 2021, and the cost is $51,690 a year for that degree in art or gender studies.
Inflation is 15% in Nevada costing households almost $10k more/yr
The Student Loan Bailout will cost Nevadans an additional $2k/yr
— Adam Paul Laxalt (@AdamLaxalt) August 29, 2022
Besides the $20,000 in possible loan relief for Pell Grant recipients and $10,000 for those earning less than $125,000 per year who did not qualify or receive the grants, there is another part of Biden’s plan that encourages higher borrowing.
That is an income-based repayment cap under which student loan borrowers would be charged no more than 5% of their annual income in repayment. This clearly encourages higher loan amounts, and for that category the White House is discussing larger Pell Grants.
Noticeably missing are any measures that would bring down the soaring cost of higher education and cap what colleges may charge. It doesn’t appear that the subject was ever even broached by the Biden administration in this windfall for higher cost education.