Thread by @CatoCEF

The latest freeze on student debt repayment ends on August 31, and the Biden administration is under pressure to forgive all federal student debt permanently.

But, there are at least five major reasons mass federal student debt cancellation is a terrible idea.

A #CatoCEF 🧵…

1. People who have graduated from college typically earn much more over the course of their lifetime ($1.2 million-$3.1 million on average).

People in such a good financial position should be able to repay taxpayers, roughly two‐​thirds of whom do not have bachelor’s degrees.

2. Higher‐​income people are more likely to borrow—and borrow more—for college than lower‐​income people.

Because of that, debt cancellation proposals would predominantly help out the highest quintile of earners rather than the lowest.

3. Federal student debt cancellation would cost taxpayers—the people who funded all these student loans whether they benefitted or not—anywhere from an estimated $260 billion (if the forgiveness cap is set at $10,000) to $1.6 trillion (if all student loans are forgiven).

4. Federal aid fuels college price inflation.

For every 1 dollar increase in “subsidized” student loans, colleges raise their prices 60 cents.

Mass cancellation would incentivize much greater inflation, making already expensive college prices shoot through the roof.

5. Blanket cancellation of federal student loans is unconstitutional.

The Constitution gives Congress, not the president, the power of the purse.

A president unilaterally cancelling up to $1.6 trillion would be a rank violation of that power.

Mass cancellation would be a blatantly unconstitutional giveaway of taxpayer money to the people who arguably need it the least, and it would exacerbate the biggest problem in higher education.

There’s nothing to like about that.

cato.org/blog/top-five-… #CatoCEF