Great Lakes Wire

Some economists are not convinced President Joe Biden's announcement that he will cancel up to $20,000 of student loan debt per borrower will help those who are burdened by student loans.

The Wall Street Journal Editorial Board wrote that the move was nothing more than "an inflation expansion act" they expect to be costly. 

"That would cost about $300 billion this year, and $330 billion over 10 years,” according to the Penn Wharton Budget Model.

“That’s far more than the $102 billion the Inflation Reduction Act purportedly reduces the deficit over 10 years starting in 2027,” according to the WSJ. “About 70% of the loan relief would go to borrowers in the top 60% of income distribution."    

Borrowers who earn an annual income of less than $125,000 will be forgiven up to $10,000 in student loan debt Fox News reported. Students who went to college on a Pell Grant will receive up to $20,000 in student loan debt. Biden also extended pandemic-era payment freezes through the end of December as the nation's federal student loan debt is currently over $1.6 trillion.  

Fox News reports more than 43 million Americans have federal student debt. However, the latest federal data shows almost a third owes less than $10,000 and more than half owe less than $20,000.

According to the Education Data Initiative, the average total student loan debt per state is $29 billion. The Treasury Department reports the country's national debt is $30.7 trillion.

The Education Data Initiative reports that $51 billion in student loan debt belongs to Michigan residents. Among the state’s indebted student borrowers, 16% owe less than $5,000 and 21.6% owe an average of $28,642.

Biden said the move was made because “universal education” was not enough to keep up with the rest of the world and the price of college has been squarely placed on students for far too long.

“Instead of properly funding public colleges, many states have cut back their support,” Biden said. “We were just talking about that in the Oval (Office). Many states have cut back support for their — their state universities, leaving students to pick up more of the tab.”

On the heels of the student loan debt relief news, Gov. Gretchen Whitmer (D-MI) took to Twitter to share the impact it would have in Michigan.

“The decision to cancel $10,000 in student loan debt and $20,000 for Pell Grant recipients will make a real difference for 1.4 million Michiganders that have student loans,” Whitmer said. “Putting money back in their pockets and lifting a huge burden off their backs.”