President Joe Biden’s student-debt plan is bad policy in too many ways to count. But is it also bad politics? Apparently he and his advisers think not, given that he announced this initiative just before the midterm elections. No disrespect to their expertise, but I wonder if they have miscalculated.
Consider the substance first. The exact cost of forgiving up to $20,000 of student debt for millions of eligible borrowers and capping monthly repayments for a different (overlapping) group is impossible to know, given that all the rules haven’t been set out. But it will likely be $500 billion or more.
Even by post-pandemic standards, that’s a lot. This avalanche of resources will be spent in a way that’s regressive, will fail to relieve the worst financial distress, and will actually aggravate the underlying problem of tuition inflation.
