VICTOR JOECKS: Wiping out student debt is welfare for the wealthy

Reportedly, the White House will announce Wednesday its plans on student loans. According to leaks, the leading proposal is eliminating up to $10,000 of debt for those making $125,000 or less. Presumably, the income threshold for a married couple would be $250,000.

This is a terrible idea for several reasons.

Total student loan debt sits at about $1.75 trillion. As of 2019, those among the top 40 percent of earners held close to 60 percent of that and make around 73 percent of debt payments. Those among the lowest 40 percent of earners held less than 20 percent of outstanding student loans and made just 10 percent of the payments.

The disparity only increases when you dig in deeper. As of 2019, 56 percent of student loan debt was in households with a graduate degree. Among adults 25 or older, just 14 percent have a graduate degree. Only 3 percent of adults have a professional or doctoral degree. They account for 20 percent of student loan debt.

Those with higher degrees earn substantially more than those without. The median salary for those with doctoral or professional degrees is around $100,000. For a master’s degree, it’s $82,000. That’s well above the $42,000 annual average for those with only a high school diploma. Their unemployment rate is two to four times higher than those with advanced degrees.

There are many problems with welfare, but at least the theory is defensible. No one wants people to starve.

That’s not what’s at stake with loan forgiveness. It’s welfare for the wealthy. The people who would reap the vast majority of its benefits earn good salaries or will in the future. The cap on who qualifies is a nod to that reality, but many high-income earners would still receive a handout from Uncle Joe.

Don’t expect progressives to protest this regressive wealth redistribution scheme. They probably will be upset President Joe Biden didn’t cancel even more debt. College graduates lean Democrat. Turns out, helping the poor isn’t as important as helping your base.

There are many other injustices with this. It’s slap in the face to those who paid off their debt or made responsible decisions to avoid debt. It’s an affront to make taxpayers, including those not yet born, responsible for a debt an individual personally took out for his or her own benefit.

It will increase inflation, by giving middle- and upper-income households more disposable income. Not great for low-earning high school graduates, whom inflation hits the hardest. Plus, this scheme would only encourage colleges to raise prices.

It’s might also be unconstitutional. In July 2021, even Speaker Nancy Pelosi said the president can’t wipe away student loans without congressional approval. Don’t expect her to mention that after Biden announces his plan.

If you take out a loan, you’re responsible to pay it back. One would hope someone with a college education could figure that out.

Victor Joecks’ column appears in the Opinion section each Sunday, Wednesday and Friday. Contact him at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on Twitter.