(CNSNews.com) - As President Joe Biden faces increasing pressure from leftists to forgive all or some part of student loan debt, many Republicans and some economists are warning against such a move.
Biden is expected to announce his plan today: After continuously extending COVID-era student loan repayments since becoming president, Biden is now expected to forgive $10,000 of debt for borrowers making less than $125,000 a year.
"The loan forgiveness suggestion is really, in my mind, would create so many perverse incentives," Sen. Kevin Cramer (R-N.D.) told "Mornings With Maria" on Tuesday.
Cramer mentioned increasing tuition costs:
"This is what an oversupply of money in a low demand market creates. It creates inflation. So, you -- right away, 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.
"What they ought to do, if they want to spend $10,000 per person on forgiving student loans, they ought to just buy several thousand copies of Dick Armey's memoirs or pay for a supply side economics course, and the whole country would be much, much better off than simply flooding this economy with more money, and then creating these perverse incentives.
"Because, already, Maria, if you look at the statistics of freshmen who don't finish college, but they take out student debt in order to experiment with college, if you start forgiving that first $10,000 for people, that just enhances this -- these reckless decisions.
"We have to have people making more thoughtful decisions, implying good economic principles, as well as their personal circumstances. And then, you have both fairness and you have a much, much more economically literate electorate."
Economist Larry Summers, who served as Bill Clinton's Treasury Secretary, has warned that student debt forgiveness will further stoke inflation:
In two tweets on Sunday, Summers wrote: "Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college."
And: "I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases."
But on Tuesday, Summers tweeted: "I think the best way to relieve student debt would be to allow it to be discharged in bankruptcy. I’d support this reform."
Republicans on the House Ways & Means Committee have presented a list of objections to Biden's anticipated student loan forgiveness plan:
"Americans are rightly concerned with Biden’s mass student loan giveaway as inflation rages," the Republicans said in the news release.
They say Biden’s mass student loan giveaway will worsen inflation:
-- Forgiving $10,000 of student loan debt per person does nothing to bring down inflation, and will only exacerbate the rising cost of higher education rather than address it.
-- Student loan debt forgiveness will create the expectation of future debt forgiveness and will incentivize students to borrow more not less.
-- The Administration’s student loan bailout will incentivize colleges and universities to raise prices, which exacerbates the problem of rising higher education costs.
-- Pursuing mass student loan forgiveness ignores the very problems most Americans are facing:
-- Workers and families are getting crushed by Biden-Flation – an average family is spending $6,000 more this year to pay for exactly what they bought the past year.
-- Even former Obama-Biden economic advisor Jason Furman has been critical, saying: “Student loan relief is not free. It would be paid for. Part of it would be paid for by the 87 percent of Americans who do not benefit but lose out from inflation. Part of it would be paid for by future spending cuts & tax increases—with uncertainty about who will bear those costs.”
-- Student loan forgiveness is a giveaway to highly educated college grads:
-- Rather than prioritizing inflation raging for Americans and Main Street businesses, President Biden’s student loan giveaway puts the economy on the back burner once again.
-- The plan overlooks Americans hurt most by Biden-Flation. Rising prices hit the poor and middle class and working women the hardest.