Progressive Democrats are pushing hard to create policy under joe Biden that would cancel student loan debt but have never stopped to really consider who really benefits. Many have remained skeptical of the long-term economic benefits. The loa forgiveness would offer a small positive immediately but not a long-term economic benefit because forgiveness is taxable.
According to the Federal Reserve, there are about 45 million borrowers who owe a collective of roughly $1.6 trillion in federal and private student loan debt as of June 2020. That’s up from $250 billion in 2004.
The top 40% of U.S. households, however, also owe almost 60% of the outstanding educational debt and make almost three-quarters of the payments, recently released data from the Federal Reserve’s Survey of Consumer Finances shows.
Meanwhile, the lowest-income 40% of households hold just under 20% of the outstanding debt and make only 10% of the payments.
While there is no exact estimate for a student loan forgiveness plan’s price tag, the Congressional Budget Office estimated that just the cancellation of $10,000 in student debt for all borrowers could cost between $250 billion to $300 billion, piling on to the growing national debt of over $27 trillion.
Keep reading for more at Fox Business.