CBS News released a new Moneywatch report on Tuesday critical of President Biden’s expected plan to erase $10,000 in student debt, asserting it would likely only benefit the wealthy and educated, while costing Americans heavily in taxes.
Citing a recent analysis from a group of economists and data scientists at the University of Pennsylvania, known formally as the Penn Wharton Budget Model, CBS News’ Aimee Picchi noted the plan would cost around $300 billion in the first year. The cost is likely to balloon if stretched out across a longer period of time.
"The benefit of erasing billions in college loans would mostly go toward Americans higher up the income ladder, the analysis also found. More than two-thirds of the debt forgiveness would help people in the top 60% of the income distribution — or those who earn $82,400 or more per year," Picchi wrote.
She added that such factors "raise questions" regarding the forgiveness program's "fairness," since the median household income in the U.S. sits below $70,000.
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The piece also noted the policy raises concerns that the handout serves no use for citizens who responsibly paid their debt, and could be viewed as favoritism towards more educated Americans, leaving those who did not attend college with no reprieve.
Picchi conceded that the ballooning student loan debt has taken a substantial toll on the U.S economy, forcing nearly 40 million Americans to delay the acquisition of major assets, such as home purchases, and other life milestones.
Yet, the piece noted that many consumer advocates and graduates feel that the $10,000 in forgiveness is "insufficient," as the average debt of college graduates sits around $38,000. Bumping this number up would be tremendously costly, with a price tag of $784 billion in the first year.
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Progressives and liberals have hounded Biden since his inauguration to provide broader relief to hard-hit borrowers, while moderates and Republicans have questioned the fairness of any widespread forgiveness.
According to a recent analysis from the Committee for a Responsible Federal Budget, the $10,000 forgiveness plan would undermine the recently passed Inflation Reduction Act by consuming nearly 10 years of deficit reduction and wipe out disinflationary benefits.
"[D]ebt cancellation would boost near-term inflation far more than the IRA will lower it," the CRFB wrote in its analysis. "$10,000 of debt cancellation could add up to 15 basis points up front and create additional inflationary pressure over time."
Fox News’ Bradford Betz contributed to this report.
