President Joe Biden is today expected to announce a student loan handout plan that would essentially use taxpayer money to pay off up to $10,000 of student debt per borrower who is making under $125,000 per year.
That means Americans may be footing a nearly $300 billion bill if Biden goes through with the reported plan — plus extends a repayment pause to next year.
The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.
The U.S. federal debt is projected to nearly double the size of the economy by 2051, slowing economic growth and raising the risk of a fiscal crisis, the Congressional Budget Office said in late July, as FOX Business reported.
JOE BIDEN EXPECTED TO ANNOUNCE $10,000 STUDENT LOAN FORGIVENESS PROGRAM ON WEDNESDAY: REPORT
Many hardworking, play-by-the-rules Americans have diligently paid off their student loans as a matter of personal responsibility. They believe in taking care of their obligations; for them, it’s the right thing to do.
“In general, I am skeptical of what the government does,” Bruce Paulson of North Carolina told Fox News Digital this week, “and I would be highly skeptical of the government forgiving all or part of a student loan.”
“To do that,” he added, “they would also be breaking contracts — which is not good.”
A digital marketing expert and founder of his own company, Paulson, 42, toiled to pay off his own student loan debt of nearly $28,000 for nearly two decades.
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“It took me 19 ½ years to pay it all off,” he said about the accomplishment of which he is proud to this day.
Though that’s a long stretch of time, he said that “if I hadn’t made the extra payments toward the principal those first few years, it would have taken much longer.”
“I’d make sure to read the fine print on any loan forgiveness to fully understand all consequences, repercussions and taxes that may come due.”
Speaking of Biden’s student loan handout plan that is expected on Wednesday, Paulson told Fox News Digital, “Who loaned the money to these students? Will those entities be made whole and paid off by the government? Or do they get shafted?”
He added, “I find government handouts highly suspicious and [they] often come with unforeseen handcuffs.”
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Paulson said as well, “I’d make sure to read the fine print on any loan forgiveness to fully understand all consequences, repercussions and taxes that may come due in the future.”
Paulson said he is wary of government involvement in “education or its funding. This is not an area that the government has any expertise in.”
He also noted, “If one was to take this loan forgiveness from the government, that deprives that [person] of an important and valuable lesson about the dangers of incurring debt.”
“If people don’t learn the dangers of taking on too much debt the first time they make that mistake, how big of a mistake will they make taking on debt in the future to buy a house or some other big-ticket item?”
“Basically, when it comes to the government forgiving all or part of anyone’s student loans, I’d be skeptical.”
“Basically, when it comes to the government forgiving all or part of anyone’s student loans, I’d be skeptical,” he concluded.
Paulson graduated in 2002 from Appalachian State University in the Blue Ridge Mountains of North Carolina. Today he runs Determined Solutions (determinedsolutions.com), a company he founded in 2015 that specializes in search engine optimization.
“Going to college and getting student loans was the biggest financial mistake I’ve ever made,” he told Fox News Digital earlier about his student loans. “But since I did it when I was young, I accepted that it was my mistake and my responsibility to fix it.”
And “that helped me tremendously throughout my life. Taking responsibility for my error and finally paying it off has been great for me,” he said.
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Josiah Poletta of Ohio, a teacher, husband and father of two, told Fox News Digital this week, “My belief is that partial student loan forgiveness could be a potentially beneficial route for the state of the economy, but only if done correctly.”
He added, “The administration should be focused on forgiving accrued interest before forgiving principal.”
He went on, “Principal is the amount that was agreed to be borrowed and paid back, but interest is money earned by the government. Government should not make money on the backs of its citizens.”
Poletta added, “It is my belief that interest payments being forgiven are not a transfer of debt to the American citizens — while principal could be viewed as such.”
Poletta and his wife, Courtney, struggled for years to free themselves of $142,000 in debt — $126,000 of which was student loan debt, Poletta told Fox News Digital in a prior interview.
“I’m not here to play the victim,” he also said. “Basically the reason we decided we were going to pay off our debt was that we deemed it the best way to get our finances in order instead of owing money to other people,” he said.
“Budgeting is what saved us,” he said — “and paying off the debt is what got us out of the hole.”
A father in New York with four children said of Biden’s reported student debt handout plan, “It’s not right, period.”
He also told Fox News Digital, “Why should people who paid for their own college by working multiple jobs, in many cases, pay for those who took out loans for the same thing?”
He added, “People need to be held responsible for their own actions. This wouldn’t do that.”
Over 43M Americans with federal student debt
Over 43 million Americans have federal student debt, with nearly a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.
Pandemic-era payment freezes were set to end on Aug. 31.
A recent analysis from the Committee for a Responsible Federal Budget (CRFB) found that the $10,000 forgiveness plan would undermine the Inflation Reduction Act by consuming nearly 10 years of deficit reduction and wipe out disinflationary benefits.
“[D]ebt cancellation would boost near-term inflation far more than the IRA will lower it,” CRFB also wrote in its analysis.
The “$10,000 of debt cancellation could add up to 15 basis points up front and create additional inflationary pressure over time.”
Fox News Digital’s Bradford Betz and Megan Henney, as well as the Associated Press and Elizabeth Economou, contributed reporting to this article.
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