Last week Biden announced his plan to cancel student debt for millions of Americans. While students are praising the President, working class Americans aren’t so happy. In fact they came out with a new ad to protest it.
Joe Biden isn’t going to like this
According to The Washington Examiner, An advertisement is going viral for criticizing President Joe Biden’s student loan forgiveness program.
The advertisement comes from the American Action Network, which calls itself a conservative “action tank.” It shows blue-collar workers sarcastically talking about working long hours to pay off the loans of those who went to college but never repaid them.
This ad calls the president’s plan a “bailout for rich kids” and airs predominantly during college football and MLB games.
Many people are also pointing out that Biden’s plan will make college more expensive.
According to Fortune, A change to the federal income-driven repayment (IDR) system could also encourage universities to increase tuition.
Students’ monthly loan payments under IDR plans are based on their post-graduation income. The existing plans require borrowers to pay 10% to 20% of their income annually for two decades, after which the remainder is forgiven. The percentage of federal student borrowers enrolled in an IDR program increased from 10% to 32% between 2010 and 2020.
With the Biden administration’s student loan forgiveness plan, IDR borrowers will pay just 5% of their income for undergraduate loans and 10% for postgraduate loans, depending on how much they owe. Additionally, the plan will increase the amount of income that won’t be subject to the IDR from 150% to 225% above the poverty line and eliminate any interest accrual.
This is a matter of incentives. Regardless of loan amount, students who borrow under the IDR plan make the same payments for a period of 10 or 20 years, thus incentivizing them to borrow as much money as possible. Therefore, universities charge as much as they can because they aren’t concerned about borrowers being unable to pay.
Despite its changes to the student loan system, the administration did not address the possibility of universities raising tuition.
Whichever way you slice it this plan is bad and going to hurt Americans badly. It sounds great to give people free money but we don’t live in a fantasy world, this isn’t going to end well.