Biden’s College Loan Debt Forgiveness Plan

If you haven’t heard, President Biden plans to go forward with plans to forgive up to $10,000 in college loans for individuals making under $125,000 a year. Obviously there are specific rules a debtor will need to follow in order to take advantage of the loan forgiveness. Reading through the articles, there are clear lines of political division masked behind the “concerns of the national debt/fiscally irresponsible”, “unfairness to those who have already paid”, and “increasing inflation”. Let’s breakdown some of the arguments as I see it.

1) Concerns of national debt. I find this argument inherently flawed. Both political sides have used this argument when the other side has been pushing a spending plans. Republicans criticized Build Back Better. Democrats criticized Trump’s Tax Cuts and Jobs Act. They clearly can’t be right and the criticisms from both sides are just smoke screens to confuse the voters.

Ultimately, voters really need to think about what kind of “national debt” is considered good debt. Using a line from advocates of higher education, taking on debt in order to obtain more schooling is good. The idea is that education will result in higher wage increases and overall higher wages making the debt more as an “investment” in the future. If voters are to also consider this “investment” hypothesis and apply to the national debt, what sort of programs are appropriate then for US to incur any sort of debt?

I personally believe investments in infrastructure, education and healthcare are critical for the future of US. These kinds of investments will undoubtedly payoff in the future (whether 5 years or 50 years) benefiting American people. Even just around infrastructure, did you know that US has an overall score of C- ( With tragic issues like what happened with the Flint water crisis, and even the current crisis in Jackson, MIssissippi, infrastructure improvements should be one of the top items on every American’s list. Improvements to fix/update highways, bridges, internet, electrical grids, water systems, sewage systems, etc… are critical since they are used everyday by millions of Americans.

With education, teaching future generations the skills needed is critical. It’s not just the advanced skills from “STEM” majors (aka science technology engineering mathmatics) but also the basic building/trade/technical skills that support every day life (carpentry, electrian, mechanic). Education helps maintain a bustling economy. Unfortunately, the emphasis on “advanced” skills seems to outweigh any thought about the basic trade/technical skills. It doesn’t matter how skilled a brain surgeon might be at the operating room table, if the hospital is not built correctly or wired correctly, or if the mechanic does not fix the surgeon’s car correctly…. that surgeon is useless to society if something happens to the building, or operating room or even his car.

And finally, healthcare is also critical to the future of US. By guaranteeing the right to a minimum standard of healthcare, the US government can ensure a standard of living for generations. If the government were to either set a minimum standard OR provide the minimum standard of healthcare, American’s would have access to yearly general check ups which would also provide a benefit of potentially spotting future health issues ahead of time instead of having to require ER visits to handle sudden (potentially preventable) medical issues. How can a “1st world nation” really say they are “1st world” when so many rely on ER visits for healthcare?

2) Unfairness to those who have paid. Why wasn’t this argument used when the US bailed out the banks and the automobile companies during the start of the great recession? If the US government can “pay” to save corporations, why can’t the same US government that “WE THE PEOPLE” created also “pay” the debts of students?

Back in the 2008, depending on the various sources (MIT, Wiki, Rolling Stone, Balance) the US government ended paying anywhere from a minimum around $500 BILLION to over $7 TRILLION. Assuming the numbers are accurate, the reader should be reminded that the $500Billion (minimum) went to corporations. At the same time, the American dream of owning homes were being shattered by foreclosures, under water home values and personal mortgage debt. American people were literally being ignored because the government made some calculation that certain financial institutions were just “too big too fail.” Hypothetically if the $500B were to have been distributed to the approximate 300M US citizens, each citizen would have received approximately $16,700.

With Biden’s loan repayment, eligible debtors would receive $10,000. Again depending on the various sources (CNBC, Daly Caller), the US government would be paying around $330 BILLION. The payment would only target a small subset of the US population based on the criteria set by the administration. At the very minimum some 20MILLION borrowers would now be debt free and be able to divert the loan money towards some other debt or future savings. That’s 20 Million borrowers who might now be able to stop living “pay check to pay check” and be able to have the ability to plan a more financially secure future.

3) Increasing Inflation. To be honest, I’m not sure how a sudden $10,000 deduction from a balance would affect inflation. Many borrowers are only putting $300-$1000 towards their debt on a monthly basis. At most the borrower will now have an extra $300-$1000 to spend on other debt or towards something important/necessary (maybe fix a car? or emergency fund?) I don’t think the extra money will lead to the increase in inflation so suddenly. I feel like pundits talk about the $10,000 as if borrowers are going to go somewhere to spend all $10,000 at once irresponsibly. Please let’s give the borrowers some credit…

Overall, I think Biden’s Loan Debt Forgiveness Plan is great. However, I think the amount of $10,000 is too much all at once. A more reasonalbe alternative would be $5,000 to knock off the borrowers balance. I also agree with the income restrictions qualification as a way to limit high earners from this program. In my study of American history, I’ve realized that America generally rewards or favors people and corporations through various financial benefits such as tax cuts, tax incentives, and even tax loopholes. Biden’s plan is one of those rare plans that try to help the common American citizen. What’s not to like about that?