In a 2014 analysis, researchers found that, since 1992, the median borrower has consistently spent only about 4 percent of monthly income repaying student loans. In a 2019 analysis of millennial households, the 4 percent rate still held.
Programs already exist to aid students in re-paying their loans through income-driven repayment (IDR) plans. As of 2019, 40 percent of borrowers are enrolled in an IDR plan.
If blanket loan forgiveness is enacted, students would, understandably, expect their loans to be forgiven in the future, and that expectation could lead to increases in borrowing, throwing gasoline on the bonfire of college tuition.
Student loan forgiveness would create an incentive for students to accumulate more debt and award as much as $192 billion to the top 20 percent of income earners.
Estimates indicate that it would take just three years for the outstanding student loan balance to return to its current level if we were to cancel $10,000 per borrower. That’s without taking into account increased rates of borrowing caused by moral hazard or the subsequently higher tuition costs.
MAKE NO MISTAKE: The CBO confirmed this week what House Republicans and the American people already knew—there is no such thing as canceling or “forgiving” student loan debt. This debt will be transferred to hardworking American taxpayers and will WORSEN inflation while rewarding overpriced colleges.