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Biden student debt cancellation plan won't lower college costs, labor economist says

Bob Fernandez, The Philadelphia Inquirer on

Published in Home and Consumer News

Beth Akers began her freshman year at Ithaca College in upstate New York. But she had qualms about the debt she would take on at that private school, so she transferred to a less-expensive public school: the University at Albany-the State University of New York, or SUNY.

“And the rest, as they say, was history,” Akers said in an email. “I was much more comfortable with the financial tradeoff.”

Akers is an expert in labor economics and a resident fellow at the American Enterprise Institute, a center-right think tank in Washington. She’s a critical voice on the student debt crisis and advocates for cuts in college tuition and costs, saying colleges’ federal funding should be tied to job prospects — and pay — of graduates.

She contends that college can represent a huge bargain for many graduates as degrees lead to high-paying jobs.

“But I also believe,” she said, “that it can’t be the only pathway for Americans to get themselves skills and education that they need to be able to contribute to the economy and support themselves financially.”

President Joe Biden’s recent debt forgiveness has moved student loans and debt high on the national political agenda. The plan will forgive $10,000 to $20,000 in federal student loans for people earning less than $125,000 and couples earning less than $250,000.

 

Estimates say the debt forgiveness would cost the U.S. government hundreds of billions of dollars. Advocates praise the plan as unburdening some — or all — of the debt for some federal student loan borrowers. An application for debt cancellation is scheduled to be posted on the Department of Education website by mid-October.

Final rules on the plan have not been released and some believe that it could be challenged in the courts.

Akers told The Inquirer that she doesn’t think the plan is fair and that it doesn’t address college costs. Below are her observations, which have been edited for clarity and brevity.

Q: What is your biggest concern about the Biden plan?

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