There are arguments in favor of supporting the government’s program for forgiving student loans.
Moral and monetary objections to the idea of the government using tax dollars to pay off loans for individuals have been raised.
Moral arguments in favor of the idea hold that people who have completed a college degree just deserve to have their debts cancelled.
The fact that the money to forgive the debts will come from taxes, or from working Americans, who frequently paid their own college debts and/or the debts of their children or who never went to college and entered the workforce after high school without the advantage of additional education, raises moral concerns on the con side.
The viability of a project is a key financial concern.
When the deficit is as large as it is, can the US government afford to spend taxpayer money forgiving debts?
A financial advisor for the Biden administration participated in a recent on-air argument with Fox News anchor Martha MacCallum.
On a recent program, MacCallum was questioning Jared Bernstein, the economic adviser for the White House, about the subject.
She questioned who was responsible for the $20,000 in forgiveness of student loans given to Pell Grant winners and the $10,000 given to borrowers income less than $125,000 annually.
The economic advisor stated that the program will be paid for by a price that is far higher than the cost of student loan debt: a reduction in the budget deficit.
MacCallum made up a scenario in which she had a credit card debt of $15,000 and received a gift of $5,000; as a result, her debt increased to $10,000 and she was left with no spare cash.
“So how is that something I can use to pay for furniture for my house? I can’t, that’s not money I have now,” she stated.
According to MacCallum, the United States is still running a sizable deficit and spending more money than it has.
She used a University of Pennsylvania Wharton model to support her claim that the cost of forgiving student loans will be closer to $24 billion than the $1 trillion estimated.
Bernstein responded with his solution.
According to the economic advisor, the expense of student loan relief is outweighed by the reduction in the deficit.
His response makes the supposition that student loan forgiveness should be taking place, that it is a finite component of the equation, and that there is nothing better to do with the money.
He intervened, saying, “Okay, well, hold on, and let me suggest how you’re doing so,” he interjected. The question on the table is is it accurate to say that we are reducing the deficit more than the cost of student loan forgiveness and the answer is unquestionably yes, okay? I hope that’s pretty straightforward.”
The United States, according to Bernstein, is far ahead economically and has plenty of extra cash.
“The way to think about this is that the government is taking in way more in both receipts and spending way less than we have been in prior years,” he added.
He disputed the Wharton model but provided no countervailing evidence or model to back up his position.
“Well you say people can look at money by numbers in a lot of different ways and the Penn Wharton model says it’s gonna cost $1 trillion. So it’s simply not true.”
Bernstein once charged MacCallum with misrepresenting him.
“Hold on, hold on, I’m not going to let you do the thing where you recast what I said totally differently,” he said. “What I’m saying is very straightforward. We are reducing the budget deficit both in this year and last year far more, multiples more than the cost of student loan debt forgiveness. Very simple, very straightforward fact, so I just want to be sure that’s on the table,” he said.
In other words, according to his scenario, the reduction in the budget deficit should be utilized to forgive debt rather than to reduce the trillions of dollars in remaining national deficit.
More on this story via The Republic Brief:
By the end of 2021, the United States was $23.4 trillion in debt.
Reported estimates on the debt growth are around an additional $13 trillion before 2028.
MacCallum attempted to use even more hard facts to make her point about student loan debt forgiveness by the federal government. CONTINUE READING…