Joe Biden Cancelling Student Loan Debt Is Economic Suicide But Politically Popular

President Joe Biden Cancels $10,000 for people making under $125,000
Another $10,000 for borrowers that received pell grant. This action is racially motivated and has nothing to do with current income being earned. To receive pell grant in college meant, you were low income then, not now.
Biden mentioned in his speech that it wasn’t fair that people had student loan debt with no degree? How come they have no degree? Is it because they partied to much and didn’t get the grades to remain in school? So now they get awarded for bad decisions?
The primary reason for the debt disparity among the black community has nothing to do with them being disadvantaged, and more to do with the fact that black college students are going to graduate programs at a far higher rate than their white counter parts. Because of this, black students are deferring loan payments another 2 to 4 years longer on average than white students.
White students are more likely to get an undergraduate and immediately enter the work force, thus being subject to student loan payments earlier and are not borrowing as much because they are not taking on the extra schooling.
-Biden also said the plan would be paid for because they are reducing the deficit. The deficit is the difference between spending and tax revenues. High Inflation, especially in the short run, naturally reduces the Deficit because it brings in more immediate tax revenue from higher prices, and wages being taxed and a slower increase in government spending.
Another thing to note is that prior to Biden first year in office, the government had a massive increase in spending due to covid, and a reduction in tax revenue due to lost incomes, and low inflation rates from covid, therefore a major deficit increase.
In Biden first year in office, even though another stimulus package was passed, Incomes increased due to people naturally going back to work, along with increased inflation rates driving higher tax revenue as well. It was not because the government is saving money, in fact they are spending far more.
This same outcome holds true for 2022, and is even more magnified because of a much higher inflation rate than the prior year. The deficit was not reduced due to any beneficial policy Biden implemented, in fact it could have been eliminated and turned to a surplus if he actually did what he should have and substantially cut spending.
The total cost of Biden debt forgiveness is estimated at $300 billion dollars.
Since 92% of student loans are held by the federal government, it was subsidized by tax money and government debt. The federal government still has to pay the interest on the debt borrowed to give out the student loans.
The Biden admin is hoping to make up the difference through GDP growth that is estimated through Student debt forgiveness and his recent passing of the Inflation Reduction Act (Build Back Better).
The problem with this is, now the federal government is in a situation where they need a higher than average inflation to mitigate the Debt-GDP Ratio and cover the massive increase in spending over the next several years.
The inflation reduction act was never estimated to reduce inflation and cancelling student loan debt actually eliminates any potential offsets in the bills spending plans.
Furthermore, cancelling student debt will not put any one in a better situation unless they were already earning a higher income to begin with.
Low income earners were primarily on income driven plans and the majority of them weren’t making any payments at all. The only people really being impacted by student loan payments were individuals who were earning higher than average salaries. Which means they were benefiting form the degree they received and had no place to complain to begin with.
Some questions to ask…
Is it fair that Americans that didn’t go to school must now pay for the $10,000 of other peoples decisions?
What about he responsible people who have already paid the loans off? Do they get money back?
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Articles

https://edition.cnn.com/2022/08/24/politics/student-loans-joe-biden-white-house/index.

https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most

https://taxfoundation.org/student-loan-debt-forgiveness/