by Martin Armstrong
The Congressional Budget Office (CBO) is a nonpartisan agency that simply crunches the numbers. The Biden administration is constantly at odds with the CBO as they repeatedly point out why handouts are never free. Biden’s midterm bribe to cancel student debt will come with a huge price tag: 400 billion dollars.
Borrowers earning less than $125,000 a year will receive $10,000 in debt cancellation, while Pell Grant recipients will see a reduction of $20,000. Everyone else will get a bill in the form of taxes, and even those with forgiven loans will suffer. The CBO calculated the cost of the plan, which will cost only $20 billion from September to December 2022. The Biden administration initially said the plan would cost $240 billion over the next ten years. However, the CBO estimates that the cost of loan cancellation will continue over the next three decades to total $400 billion.
Yes, this will cause the US deficit to increase. Instead of working to lower tuition costs or predatory student loan practices, Biden simply passed the bill on to taxpayers and pretended the money owed simply disappeared. Colleges can simply raise their fees without any repercussions. Glass Stegall has not been reinstated, and those facing bankruptcy cannot erase their student debt.
Glass Stegall was repealed under the Clintons, and even the Clintons’ top financial adviser, Larry Summers, is against Biden’s student loan forgiveness program. “It consumes resources that could be better used helping those who, for whatever reason, did not have the opportunity to attend college. It will also tend to be inflationary by raising tuition,” Summers wrote on Twitter in August. This is simply a ploy to buy off voters who don’t understand the ramifications.