Heritage Experts: Biden's Student Debt Cancellation Robs Hard-Working Americans, Will Make Inflation Even Worse

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Heritage Experts: Biden's Student Debt Cancellation Robs Hard-Working Americans, Will Make Inflation Even Worse

Aug 24, 2022 2 min read

WASHINGTON—The Department of Education today announced a plan to make working and middle-class Americans pay off billions of dollars in student loans, a fundamentally unfair and regressive move that will accelerate the rise of inflation. The move comes as the administration also extended a pause on student loan repayments, letting borrowers avoid making even one payment on their loans or accruing any new interest.

Lindsey Burke, director of the center for education policy at The Heritage Foundation, and Adam Kissel, Heritage visiting fellow for higher education, released the following statement on this disastrous plan:

"Working and middle-class Americans who chose not to go to college, or who responsibly paid off their student loans, should not be forced to pay off the loans of others. Biden’s loan cancellation scheme forces them to do just that.

"It will rob working Americans in order to pay off the college degrees of individuals who are statistically more likely to earn more in their lifetimes simply by possessing a college degree. This is radically unfair, and it’s the epitome of putting special interests ahead of working Americans.

“We also know from the last 34 months of ‘pausing’ student loan repayments that this type of policy is inflationary. Cancelling $10,000 in student loan debt per borrower contradicts the so-called Inflation Reduction Act and will cost American taxpayers hundreds of billions of dollars.

“Student debt cancellation not only will add to our inflation woes but will do little to make loans more affordable for lower- and middle-income student borrowers. Biden’s irresponsible policy will exacerbate college costs without improving the value of degrees.

"It’s a handout to special interests and a gift to woke universities. Loan cancellation is already baked into income-driven repayment plans for low- and middle-income borrowers, so this across-the-board forgiveness will simply further inflate tuition prices as university elites bank on another round of loan cancellation in the future.

“Worst of all, it’s an insult to those Americans who worked their way through college, lived modestly upon graduation in order to pay off their debt, entered the armed forces to receive the earned benefit of the GI Bill, or eschewed college altogether because they believed it was a bad-value proposition.

"Make no mistake, the working people who make this country great reject these bailouts and will make their voices heard in doing so.”

Background: Instead of unfairly foisting student loan debt on American taxpayers and extending repayment for student loans, lawmakers and education officials should address the policies that are driving up college costs, increasing student loan debt, and widening the growing skills gap.

Heritage laid out several recommendations in a recent report that would:

  • Phase out federal subsidies for higher education to reduce the inflated tuition costs and allow a more level playing field across different education options.
     
  • Allow apprenticeship programs to expand by directing the Department of Labor to revive the Industry-Recognized Apprenticeship Program.
     
  • End disastrous federal job training programs so that Americans can obtain more effective training from the private sector through better tailored state and local initiatives.

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