(RepublicanReport.com) – Student debt remains one of the most pressing issues facing our policymakers today. With an estimated $1.6 trillion outstanding, it’s a very sizeable liability on our federal government’s balance sheet.
Joe Biden proposes forgiveness of the debt, hoping to bolster the economy by increasing the spending power of individuals. However, a CNBC report released on Sunday, December 6, suggests this could do much more harm than good.
The main criticism of the idea is that it would worsen income inequality, rather than evening it out. Those who owe the most in student debt also tend to be the wealthiest; this means high earners would ultimately realize most of the benefits from this policy.
Canceling student loan debt would worsen wealth inequality.
The highest-income college grads would receive 6.5x more benefit than the lowest. https://t.co/9FeyyfBHGk
— Frank Luntz (@FrankLuntz) December 1, 2020
Any major fiscal policy decision has advantages and drawbacks. Forgiving student debt would certainly yield some economic gains. However, if we take a broad view, it’s clear the risks comfortably outweigh the potential benefits.
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