FARGO – U.S. Senator Kevin Cramer (R-ND) issued the following statement after President Joe Biden announced the cancelation of up to $10,000 in federal student loan debt per borrower and up to $20,000 of debt for some borrowers who previously received a Pell grant. President Biden’s unilateral decision to forgive the student loan debt of some borrowers also included an extension of the payment pause through December 31, 2022.
“Just when you think Joe Biden can’t possibly make inflation worse than he already has, he pulls this stunt. Not only will this ‘free money’ further fan the flames of Biden’s inflation, it is fundamentally unfair to the millions of Americans who don’t have student debt to pay off. Transferring student loan debt to people who paid theirs off or never accumulated any in the first place is theft, and taxpaying voters will be justifiably outraged,” said Senator Cramer.
Background:
Senator Cramer opposed Education Secretary Miguel Cardona’s nomination due to the Administration’s progressive agenda emboldening teachers’ unions and boasting canceling student debt.
Free debt cancellation provides a perverse incentive to borrow and spend money one does not have, while undercutting those who are faithfully paying or have responsibly paid off their student loans. Senator Cramer discussed the perverse incentives and inflationary consequences of student loan forgiveness yesterday on Mornings with Maria.
“The loan forgiveness suggestion would create so many perverse incentives starting with—to Larry Summers’ point—the increasing of tuition costs. This is what an oversupply of money in a low-demand market creates. It creates inflation. If you gave every kid in America $1,000 to go toward their next semester of college, the price of college goes up $1,000,” said Senator Cramer.
The U.S. Department of Education already offers income-driven repayment plans for low-income borrowers as well as specific professional or situational federal loan forgiveness programs including the Teacher Loan Forgiveness program, the Public Service Loan Forgiveness, or programs related to military service.
