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Speaking to Fox News Digital by phone on Thursday about the new Biden administration student loan handout plan announced this week, former Secretary of Education William Bennett was very clear.
“This is a terrible, terrible, idiotic idea,” he said.
“I’ll just tick off a few things,” Bennett said about the new plan and how it will affect Americans.
“There’s the inflationary effect of this — and I’ll leave that to the economists and others. But almost everyone, including former Obama administration officials, indicate that this will add a lot of fuel to the fire in terms of inflation,” he said.
On that point, a Penn Wharton Budget Model has found that a one-time maximum debt forgiveness of $10,000 for borrowers making less than $125,000 will cost around $300 billion for taxpayers. Some economists argue this will spur inflation. The $300 billion adds up to about the amount of deficit reduction included in the so-called Inflation Reduction Act passed earlier this month.
Also, 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 national debt, according to the Treasury Department, is currently $30.7 trillion.
William Bennett continued, “So that money that was just forgiven will go into the economy and heat things up — and prices will go up. Prices will go up for everyone.”
“Also, those hurt the most by this will be the people who have the least — and who will not have the benefits of the student forgiveness plan.”
“A couple categories here,” he added. “One, all the people who didn’t go to college or graduate from college. And second — and this point has been kind of neglected — are minorities.
“We’ve seen a decline in the numbers of Black enrollment in higher education over the last five or 10 or so years,” said Bennett. “So this is going to fall disproportionately on minority groups.”
Bennett cited, for starters, a study done at the University of California, Santa Cruz — a working paper of Stanford University’s Institute for Economic Policy Research. Researchers found that California community colleges experienced a significant decrease in enrollments since the onset of the COVID-19 pandemic — “and these enrollment decreases are particularly apparent among Black and Latinx students,” the group found.
“There’s a bit of a ruse here — ‘Well, these are people who are stuck at under $125,000 in terms of their income,’ according to the Biden people. Well, no, they’re not.”
“Although all racial and ethnic groups experienced large decreases in enrollment during the pandemic,” the California study said, “Black students experienced the largest effects. Black enrollment dropped by 5 percent in spring 2019, 14 percent in fall 2020, 12 percent in spring 2021 and 7 percent in fall 2021.”
And “from fall 2019 to fall 2020, enrollment dropped by 20 percent among Black students,” the study also found, as noted in The Journal of Blacks in Higher Education.
Bennett also pointed to a fact sheet from the Postsecondary National Policy Institute (PNPI), which noted, in part, that “while Black students have made enrollment gains over the past two decades, there has been less progress in closing the degree attainment gap.”
Said Bennett of the Biden student loan handout plan: “So it is disproportionately favoring high earners who are White and who are earning these degrees and holding this student debt. It’s favoring people who have gone to college or graduate school — and there is a higher population of Whites in that group than across the population as a whole.”
He added, “Blacks have dropped out of college or have not attended college, in terms of showing smaller numbers over the last few years — so they will not get [as much] benefit from this.”
“The other interesting and tricky thing on this is the income level cutoff of the plan — the $125,000 for an individual and the $250,000 for a couple,” said Bennett.
“The $250,000 combined income for a couple is not so bad — that’s living pretty well in America.
“They may be at a fairly low income level now — but they’re just starting out. They’re going to reap the benefits of their college education in the future.”
“But remember that these people are making this amount, of $125,000 or less, at the start of their careers. At the beginning. These are basically people who are still young in their 20s or their 30s. They’re going to make a lot more money as they go along.
“So there’s a bit of a ruse here — ‘Well, these are people who are stuck at under $125,000 in terms of their income,’ according to the Biden people. Well, no, they’re not. We don’t know exactly, but there is a very strong argument that these people may have just finished college or may be in graduate school, so they’re early on in their professional careers.
“And they’re going to make a lot more money in the future. They may be at a fairly low income level now — but they’re just starting out. They’re going to reap the benefits of their college education in the future.
“That’s one thing about higher education that most people agree on — you’re going to make more money overall if you have those college degrees than if you don’t, whether that’s fair or not,” he said.
“That should be taken into account,” Bennett said. “So why favor forgiveness for people who have done that?”
“We just keep chasing our tail. Keep increasing the grants, the loans — and they will keep increasing the charges. As soon as the money’s there, they will find a way to charge you for it.”
He continued, “The other thing is — and I was delighted to see myself quoted this week from back in 1987, for goodness’ sake — as soon as you forgive these loans for higher ed, the colleges and universities will raise their tuition and fees. And they will.
“College charges and university charges have gone up so much higher than the rate of inflation — and we will see another increase now by the people who run these institutions.”
Bennett added, “We just keep chasing our tail. Keep increasing the grants, the loans — and they will keep increasing the charges. As soon as the money’s there, they will find a way to charge you for it.
“Americans will do anything to get their kids into college and through college. And that obviously benefits the institutions.”
So what about all the people who paid off their loans and how they feel about this?
“No kidding. I’m one of them,” replied Bennett.
“You’re violating a basic contract agreement and obligation — when you take on debt, you should pay it back. And you’re not helping people who did the honorable thing.”
“I got out of school in 1970 — I owed $24,000, which is a lot of money today. And the first thing I did was I paid off my loans. I just didn’t like the idea of this debt hanging over me.
“A lot of people did that,” he added. “And what do they [the administration] say about this?”
“The people who paid down their debt — they get nothing out of this. The people who never had debt — they get nothing out of this. The welders, the hairdressers, so many others — they get nothing.
“So here you are, making a move that’s very bad for the economy, in terms of inflation,” said Bennett.
“You’re favoring an already advantaged class over others,” he said.
“You’re violating a basic contract agreement and obligation — when you take on debt, you should pay it back. You signed the paper — you took it on. And you’re not helping people who did the honorable thing.”
The “moral hazard here is pretty obvious,” Bennett said.
“It’s a terrible, terrible, idiotic idea,” he said of the student loan handout plan.
And “the only reason we can think that a person would advance this,” Bennett said, “would be for political purposes. They’re hoping that the people who get this [loan handout] will vote for Biden. That’s the only conclusion you can draw.”
Brooke Singman of Fox News Digital contributed reporting to this article.