What They Are Saying: Economists on Biden’s Student Loan Debt Forgiveness Plan

Yesterday afternoon, President Biden announced his plan to wipe away up to $20,000 in student loan debt and it went over like a lead balloon. The base of liberal voters he was hoping to court with this announcement don’t think it goes far enough, while the very voters he needs, Independents, increasingly believe it is a bad idea, according to recent polling. Economists and the typically friendly Washington Post editorial board seem to be broadly in agreement that this is bad policy and bad for our economy. These are not the reactions Democrats were hoping for just 75 days out from Election Day:

Committee for a Responsible Federal Budget: “…debt cancellation would boost near-term inflation far more than the IRA will lower it…$10,000 of debt cancellation could add up to 15 basis points up front and create additional inflationary pressure over time.”

WaPo: “The loan-forgiveness decision is even worse. Widely canceling student loan debt is regressive… Mr. Biden’s plan is also expensive — and likely inflationary.”

Brookings: “Across-the-board student loan forgiveness is regressive measured by income, family affluence, educational attainment—and also wealth.”

FOX Business: Former Obama economist Jason Furman noted that loan forgiveness is not “free money” and part of the student loan forgiveness “would be paid for by the 87% of Americans who do not benefit” from loan forgiveness but have to deal with inflation. 

Obama Economist Larry Summers tweeted: “Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.”

Newsweek: Economist Art Laffer, who served on the Economic Policy Advisory Board for the Reagan Administration, said that Biden’s student loan plan will “clearly worsen” inflation. 

Bloomberg: “Given current economic conditions in the U.S., this is an irresponsible approach…Restarting student debt collections would restrain inflation at the expense of a disproportionately high-income minority of the population. Broad debt cancellation, by contrast, would boost inflation.”

 Business Insider: Even Biden’s own White House feared forgiving student debt would send inflation “skyrocketing.” 

CNBC: “59% of Americans are concerned that student loan forgiveness will make inflation worse, according to a new CNBC survey, conducted online by Momentive among a national sample of 5,142 adults from Aug. 4 to 15.”

Morning Consult Poll: “The share of independents who said they oppose another extension jumped from 32% in March to 46% in August. Among all registered voters over that time period, support fell 4 percentage points to 46% and opposition increased 8 points to 41%.”

Despite the negative coverage and polling, many Democrats running in competitive races have embraced and continue to embrace President Biden’s position: 

Dina Titus (NV-01): 

• On August 24, 2022, Titus Tweeted, “Students Should Be Able To Pursue Higher Education Without Worrying About Being Saddled With A Lifetime Of Debt. I Am Happy To See @POTUS cancel $10k Of Debt For Students Making Less Than $125k Because It Will Provide Relief To Many Who Need It.”

Marcy Kaptur (OH-09): 

• In January 2010, Kaptur stated, “The young people, they’ve got all the instruments but they’ve got to remember their political power. They’ve got to reassume their political power. They’ve got to mobilize, and frankly if I were the young people, one of the first things I do is I go to Congress and I’d say take the 143 billion dollars back from Wall Street. They don’t deserve it because they hurt the American people and help us forgive our student loans from coast to coast. And, do you realize how far that would go to freeing this generation from the bondage that they’re in? I’d work with them on that. I’d march with them.”

Steven Horsford (NV-04):

• On January 3, 2022 Horsford Tweeted, “2022 Is The Year We Can Cancel Student Debt.” 
• On November 18, 2020 Horsford Quote Tweeted A Running Student Debt Clock And Said “Cancel Student Debt.” 

Vicente Gonzalez (TX-15):

• On August 4, 2022, Gonzalez Tweeted, “@POTUS Now Would Be A Great Time #CancelStudentDebt.”
• On July 20, 2022, Gonzalez Tweeted, “Mr. ‘Student Debt Is Crushing The Economic Mobility Of Americans And Hindering Them From Living The American Dream, But @POTUS Has The Ability To Fix This And #CancelStudentDebt With A Stroke Of A Pen’ Seemed Too Long.”

Tom Malinowski (NJ-07):

• On August 24, 2022, Malinowski Praised Biden’s Student Loan Forgiveness Plan As Providing “Americans Much Needed Relief.” 

Annie Kuster (NH-02):

• On August 24, 2022, Kuster Claimed Biden’s Student Debt Plan Represented “Positive Progress” But Claimed “More Must Be Done.” 
• On May 18, 2017, Kuster Called For Fixing “High Student Loan Debt,” Calling It A “Drag On Our Economy.”

Sanford Bishop (GA-02):

• On April 13, 2022, Bishop Urged Biden To “Provide Meaningful Debt Cancellation Of Student Loans.” 

Jahana Hayes (CT-05):

• On August 24, 2022, Hayes Tweeted, “Thank you @POTUS for delivering student debt relief to Americans most in need. This will have a lasting impact on the residents of Connecticut. I will continue to work with the Administration to decrease the burden of student loan debt and make college more affordable.”

Maggie Hassan (D-NH):

• On August 25, 2022, Hassan Said She Does Not Support Canceling All Student Debt, But Called Biden’s Student Loan Debt Cancelation, “A Balanced Compromise Approach.” 

Mark Kelly (D-AZ):

• Kelly Supports The Biden Administration’s Student Loan Debt Forgiveness Plan, Saying He Was Happy It Was “Targeted” And That The “Federal Government Should Not Be Profiting Off Of Young Graduates.” “Democratic U.S. Sen. Mark Kelly, who’s up for re-election in November, supports Biden’s plan. ‘The reality is college costs too much, and the federal government should not be profiting off of young graduates,’ he said in a statement to Axios. Kelly said he’s glad the plan is ‘more targeted’ than other proposals that would cancel all student loan debt. Yes, but: Blake Masters, Kelly’s Republican opponent, vehemently opposed the plan. ‘Robbing Peter to pay Paul is socialism and not the American way. Sadly, Joe Biden and Mark Kelly continue the Venezuela-ification of America,’ he told Axios in a statement.” 

Raphael Warnock (D-GA):

• Warnock Responded To Biden’s Debt Cancellation Plan By Saying “I’m Grateful President Biden Has Listened To Me.” “Easing student debt will provide long-term benefits for hardworking Georgians of all ages, as well as our economy. I’m grateful President Biden has listened to me & the people of Georgia.”