5 reasons why student loan forgiveness is a bad idea – Forbes | Vette Leader

Here are 5 reasons why forgiving student loans is a bad idea, according to a top Republican US Senator.

Here’s what you need to know – and what it means for your student loans.

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Sen. Roy Blunt (R-MO), the top Republican on the Senate subcommittee on Labor, Health and Human Services, gave a lengthy speech on why large-scale student loan forgiveness is bad policy. Among his arguments:

1. Student loan forgiveness disproportionately benefits wealthier Americans

First, Blunt notes that more than 80% of Americans have no student loans. Why? They either paid off the student loan debt or never went to college. There are approximately 45 million student loan borrowers and approximately 250 million adult Americans. Notably, 60% of student loan debt is held by households earning more than $74,000 annually. According to Blunt, student loan forgiveness disproportionately benefits wealthier Americans. Are there individual student borrowers who are struggling financially? Certainly. However, Blunt notes that the opportunity to attend college and earn a college degree is an advantage that, on average, translates into higher income. As an alternative to student loan waivers, Blunt would rather have Congress increase Pell Grants to lower college costs for financially vulnerable students. “The top 40% of American households hold 60% of student loans,” Blunt said. “The bottom 40% have less than 20% of student loans. If you were going to talk about it at all, maybe you should talk about it – maybe we should be talking about the bottom 40% of incomes, not the essentially top 40% of incomes, [with] blanket debt relief.”

2. Biden does not have the authority to cancel student loans

Second, Blunt says that President Joe Biden does not have the legal authority to enact a large-scale foreclosure of student loans without Congressional approval. Senator Elizabeth Warren (DMA) disagrees, noting that the Higher Education Act of 1965 gave the President (through the US Secretary of Education) unlimited authority to cancel an unlimited number of student loan debts for an unlimited number of student loan debtors. However, Blunt says you don’t have to take his word for it. House Speaker Nancy Pelosi (D-CA) and Biden said the president does not have unilateral authority to call in student loans. Rather, Congress must pass legislation or otherwise authorize the President to respond to student loan enactments.

3. Biden has shown no commitment to comprehensive student loan forgiveness

Third, Blunt notes that despite the rhetoric of canceling $10,000 in student loans for borrowers, the Biden administration has not prioritized large-scale cancellations of student loans. Yes, Biden has forfeited $25 billion in student loans since becoming president. However, this student loan termination is aimed at specific borrowers such as: B. Officials or borrowers with a permanent disability. Blunt notes that Biden did not include a motion for a large-scale cancellation of student loans in his recent legislative budget. Last week, US Secretary of Education Miguel Cardona met with Blunt and his colleagues on Capitol Hill to discuss the education budget, but it included no student loan requests. There are several proposals for student loan legislation in Congress, but Blunt says the president hasn’t sent a proposal that a fellow Democratic colleague could introduce and then debate in the Senate. For example, while the Democrats control the Senate, Senate Majority Leader Chuck Schumer (D-NY) has yet to vote a major student loan bill in the Senate.

4. Biden should cut inflation instead of calling in student loans, which can increase inflation

Fourth, Blunt says sweeping student loan forgiveness could increase inflation. “What Americans really need right now is relief from the crushing inflation we’re seeing, rather than more bad policies that put more money into the economy and drive inflation to even higher levels,” Blunt said. If the economy is doing so well, Blunt asks, why is the president possibly spending more than $300 billion canceling student loans, benefiting wealthier Americans? Blunt also questioned why student loans were being forfeited and not mortgage debt, credit card debt, or car debt.

5. Forgiving student loans will not lower the cost of college

Fifth, Blunt says student loan forgiveness will happen on a large scale increase the cost of college. Why? Prospective student loan borrowers will take out student loans thinking they don’t have to pay them back. It sends the wrong message about personal responsibility, Blunt has argued.

Proponents of large-scale student loan foreclosure say that large-scale student loan forgiveness offers several benefits. These include economic incentives, reducing inequality, and providing financial facilitation for student loan borrowers to get married, start a family, buy a home, save for retirement, or start a business. With temporary student loan relief ending soon, Biden could decide the future of student loan forgiveness in the coming weeks or months. Until then, focus on your student loan repayment game plan. Start here as you consider all of your student loan options:

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