The Sconi

A new Issues and Insights report warns President Joe Biden’s debt forgiveness plan will exacerbate the economic impact of federal financing for college education.

"If the past decade’s aid spending remains constant, the federal government will be spending upward of $270 billion a year subsidizing colleges. (That compares with $140 billion a year for food aid.)," the Editorial Board at Issues and Insights recently wrote.  

Back in August, Biden announced that for borrowers making less than $125,000 a year, he will cancel $10,000 of federal student loan debt; and for borrowers who attended college on Pell Grants, he will forgive up to $20,000 in student loan debt. In addition, Biden has extended pandemic-era payment freezes through the end of this year.

Since then, Wharton School officials have joined those warning that the financial impact of this totally-taxpayer-funded measure on the nation is even greater than it seems. A new study determined the annual costs of the plan could run as high as $605 billion with the 10-year cost of the plan likely topping $1 trillion, when income-driven repayment (IDR) programs and other factors are considered. 

According to the Penn Wharton Budget Model, Biden’s forgiveness plan includes three major components: debt cancellation, loan forbearance and IDR programs.

In addition, the College Board, which tracks how much money the federal government spends on college students annually, reports that federal aid during the 2020-21 school year was $134.4 billion. Over the last decade, that number swelled to $1.7 trillion, with states giving another $119 billion. When grants from institutions, individuals and employers are factored in, Issue and Insights said the overall assistance in the last decade reached $2.6 trillion.

While most Democrats have voiced full support for Biden’s plan, NBC News reports Wisconsin Lt. Gov. Mandela Barnes, now running for the U.S. Senate, has gone silent on the issue.

Barnes, who held a slight lead over Republican Sen. Ron Johnson in a recent poll, did not respond to recent requests for comment.

“Mandela Barnes cleared the field of other Democrats because of his adoption of the policies of the radical left,” Johnson spokeswoman Alexa Henning said. “That’s why Bernie Sanders and Elizabeth Warren endorsed him. Of course he supports this. Any notion from him otherwise is a lie.”

In branding a college education as “an investment in yourself intended to pay dividends for the rest of a person’s life in the form of higher earnings,” a recent Issues and Insights editorial raises the question, “Why do taxpayers (most of whom never got a college degree) have to spend so much of their hard-earned money subsidizing others’ educations?”

Several experts also recently told Fox Business that Biden's plan is expected to cause an incline in college tuition prices and add to the inflation crisis.

"Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition," Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, told the network. "This is pretty similar to the fact that historically 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes."

According to research from the College Board, "Between 2006-07 and 2021-22, the average grant aid per first-time, full-time in-state student at public four-year colleges increased by $3,740 in 2021, from $4,360 to an estimated $8,100. The average published tuition and fees in this sector increased by $3,010, from $7,730 to $10,740."