Democratic Party Congresswoman and self-proclaimed Socialist Alexandria Ocasio-Cortez (AOC) (NY) has criticized President Joe Biden for not supporting student debt forgiveness of up to $50,000 per person. On her Twitter account, the Congresswoman called on her supporters to “keep pushing” on the President to forgive the debt.
In an interview on CNN, President Biden said: “I will not make that happen”, referring to the forgiveness of student debt for that amount. The Democrat said he would be willing to forgive up to $10,000, but did not believe he would be able to approve more than $10,000 in college debt forgiveness without Congressional approval. He also stated that the student debt forgiveness money could be better spent on early childhood education.
AOC did not take kindly to Biden’s statements at all, and urged the President to forgive the $50,000 in debt, as the proposal has the support of Senate Majority Leader Chuck Schumer (D-NY). AOC also asserted that “many of the arguments against it just don’t hold water on close inspection.”
The Congresswoman argued that “Who cares what school someone went to? Entire generations of working class kids were encouraged to go into more debt under the guise of elitism,” and asserted that there is no trade-off between student debt forgiveness and early childhood education.
While AOC doesn’t seem to care about anyone’s college background, the truth is that American taxpayers surely do care about having to pay off the college debt of people who studied at MIT or Harvard and who earn twice the income of the average U.S. college student.
A recent study by the University of Chicago estimates that if a $50,000 per person student debt forgiveness were approved, households in the top 10 percent of income brackets would benefit up to seven times more than households in the bottom 10 percent of income brackets. In other words, debt forgiveness simply because of the cost of tuition at the most expensive colleges would disproportionately benefit those who need it the least.
Student debt averages $34,000 (including interest) and is even lower for low-income graduates, who receive substantial debt forgiveness under an income-driven repayment plan, while extraordinary debt is forgiven after 20 to 25 years.
Considering that the average U.S. college graduate earns more than $50,000 a year, it is hard to believe that U.S. graduates are drowning in college debt.
Even if U.S. graduates are drowning in debt, it will be mortgage debt, not student debt. Home buying by young adults has reached records not seen since before the 2008 crisis. The biggest impediment to home buying is lack of cash, but with home buying at record-highs, college debt does not seem to be an impediment to graduates buying one of the most precious assets for any person: their own home.
AOC’s qualms even ignore the fact that for most people who can’t pay their college debt, it will be forgiven for everyone. Up to $435 billion will eventually be forgiven, as under the pay-as-you-earn figure (established by Democrats in 2010) a graduate pays less than 10% of their tuition cost per year; if they are unemployed, they don’t have to pay it; and after 20 years the debt is forgiven in full.
Despite her desire to forgive debt for even Ivy League graduates, the reality is that forgiving $50,000 of debt is unnecessary, as there are already programs in place to forgive debt for those who cannot afford to pay it, and for the rest of Americans, their income from their education is sufficient to pay off the debt and acquire such essential assets as a home of their own.