President Biden isn’t even waiting for the Supreme Court to decide on his last $400 billion student loan bailout before rolling out another, even more, costly plan. (Oral arguments are supposed to be heard on February 28.)
Biden’s new scheme works like this: a debtor pays back what he or she can based on their income and eventually the rest gets forgiven. It would require borrowers to pay at most just 5% of the difference between their income and 225% of the poverty level. This means that many borrowers wouldn’t have to pay much of anything at all.
Then, in many cases, if you make those small (or in some cases nonexistent) payments for as little as 10 years, taxpayers pick up the tab for the rest of your loan. Estimates are the bailout would cost the average family paying taxes over $4,000 over time.
The liberal Brookings Institution reports a typical borrower will only have to pay back only 50 cents for every dollar he owes. No wonder Education Department officials call the plan a “student loan safety net.”
Over time, if the Biden plan gets through the courts the costs will be magnify. Soon, college will be”free.”