Penna Dexter

The White House has announced a sixth extension in the Covid-inspired pause on federal student loan payments — this time through August. The Wall Street Journal calls this “cancelling student debt on the installment plan.” The Journal wonders why, with the rest of the country returning to normal, student borrowers can’t start making their loan payments.

Progressives are pushing the administration to forgive at least $50,000 per borrower. “Could it be teeing up even more sweeping loan forgiveness?” the Journal editorial asks. Just in time for the fall elections.

The renewal of the student loan repayment moratorium is inflationary. Bloomberg’s Matthew Yglesias points out that the economy no longer needs the stimulus derived from slowing down or not collecting student loans.

According to an estimate by the Committee for a Responsible Federal Budget, the pause in student loan repayment has cost taxpayers more than $100 billion so far. And it will mostly benefit those who need it least – higher earners with graduate degrees. Graduate students take on much more debt and their loans carry higher interest rates. To some grad students, this level of debt makes sense because they have higher earning potential.

Columnist George Will questions the wisdom of “ever-higher college enrollments.” He points to the proliferation of master’s degrees, a 51-percent increase in the last decade, which he contends has been “enabled by excessive student borrowing.”

George Will points to a study by the Brookings Institution revealing that about a third of student debt is held by the wealthiest 20 percent of households. In a column, Matthew Yglesias writes: “Most people do not go to college and do not incur student loan debt, and those non-debtors have lower incomes on average than the people who do go to college and do have debt.“

A massive student loan forgiveness may buy some votes, but perhaps not those of students who scrimped to pay their loans and parents who saved to pay for college.