Prominent Democrats have babbled away about their desire to make college “free.” That probably won’t happen, but they’ll come pretty close under Biden’s debt-cancellation program.
As Andrew Gillen of the Texas Public Policy Foundation explains here, there is much more to it than just “forgiving” a lot of student debts. Biden’s proposal uses every lever available to reduce the amount that students will have to repay.
Specifically, according to Gillen, Biden’s plan would:
• Increase the income exemption (under which loan payments are $0) to 225% of the poverty line (under existing plans, this is typically 100% to 150%);
• Lower the percent of income owed to 5% (under existing plans, this ranges from 10%–25%);
• Forgive loans after 10 years of repayment for undergraduates borrowing less than $12,000; and
• Waive any unpaid interest.
Gillen concludes, “In sum, the Biden repayment plan is a misnomer, as only token repayment is required. This plan makes a mockery of student lending, and if it is enacted, the entire student loan system needs to be scrapped at the earliest opportunity.”
To that, I would only say that the student loan system needs to be scrapped whether Biden’s plan is enacted or not.