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Obama Economist Calls Biden's Student Loan Forgiveness Plan ‘Reckless’

Former presidential advisor says costs will eventually be shouldered by everyone and will increase inflation

A former Obama administration economist has come out publicly against President Joe Biden’s plan for student loan forgiveness.

“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Jason Furman wrote in a Twitter thread. “Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.”

His criticism comes the day the Biden administration announced a plan whereby the U.S. Department of Education would provide up to $20,000 in student loan debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation for non-Pell Grant recipients.

“The White House fact sheet has sympathetic examples about a construction worker making $38K and a married nurse making $77,000 a year,” he said. “But then why design a policy that would provide up to $40,000 to a married couple making $249,000? Why include law and business school students?”

The White House said providing student loan relief will help keep college costs under control. Furman cautions that eventually everyone will ultimately pay for this program in the form of either higher taxes or a reduction in benefits. He also warned of other “highly problematic” unintended consequences, including possible higher future tuition, increased borrowing, and the expectation of future debt forgiveness.

“I understand not everything I’m announcing is going to make everybody happy,” Biden said. “Some think it’s too much — I find it interesting how some of my Republican friends who voted for those tax cuts think we shouldn’t be helping these folks. Some think it’s too little, but I believe my plan is responsible and fair. It focuses the benefit on middle-class and working families, it helps both current and future borrowers and it’ll fix a badly broken system.”

Biden’s student loan cancellation effort has drawn bipartisan criticism — Republicans largely believe it shouldn’t be done at all, while Democrats believe it doesn’t go far enough — and Furman believes the administration faces legal hurdles moving forward.

“Finally, it’s not obvious to me that this is reasonable for a President to do unilaterally,” Furman wrote. “A number of lawyers (and political leaders) have argued [it’s] inconsistent with the law. Even if technically legal I don’t like this amount of unilateral Presidential power.”

The U.S. Department of Education will be announcing details on how borrowers may apply for relief over the next few weeks.

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