- Purdue University president Mitch Daniels said student loan forgiveness is “a gift to the rich.”
- Daniels appears to be citing research showing that debt relief primarily benefits high-income earners.
- The White House said former Vice President Joe Biden is considering debt relief for borrowers under $125,000.
Mitch Daniel Purdue University President told CNBC On Wednesday, he called student loan forgiveness “the most regressive policy idea we’ve ever seen” and believes it will exacerbate inequality designed to correct.
Former Indiana governor Daniels told CNBC’s Squawk Box “a gift to the rich.” “Doctors and lawyers are the two categories that will benefit the most. Only 5% of even the most modest offers go to the bottom quintile.”
Daniels appears to be citing: study A report from the University of Chicago released last year found that student loan relief ranging from $10,000 to full forgiveness could redistribute income upwards. That’s because nearly half of all student debt belongs to individuals pursuing careers in high-income fields.
A study from the University of Chicago, also referenced by the Committee for Responsible Federal Budget, found that only 5% of debt relief would benefit the lowest-income individuals.
Benefits for future high-income earners have been a consistent argument against student loan bailouts. But, as Insider previously reported, loan waivers can not only boost the economy, but also benefit minorities and low-income families.
White House press secretary Jen Psaki confirmed last week that President Joe Biden is considering canceling student loans for borrowers earning less than $125,000 a year. Matt Bruenig, founder of the left-leaning People’s Policy Project, previously told Insider that about 79% of student debt borrowers qualify under the policy.
Former Vice President Joe Biden said in an April speech that a decision on student loan forgiveness would be made “in a matter of weeks.”
Former Republican governor Daniels seems to reflect the sentiments of many in the Conservative Party. Senator Susan Collins (R-Maine) has previously said that insider loan forgiveness is “not fair” to those who have paid off debt over the years.
Last year, analysts at JP Morgan said Income restrictions can make student debt relief “less regressive.” But some Democrats, including New York Congressman Alexandria Ocasio-Cortez, are opposed to the income limit.
Ocasio-Cortez said, “I don’t believe in the cutoff, especially for many frontline workers who are in debt and likely to be excluded from bailouts.” said Washington Post in April. “Paying off the $50,000 debt is where you really close inequality and the racial wealth gap. $10,000 doesn’t.”
Ultimately, Daniels argued, paying off student debt today means that the same generation will have to pay off the added national debt over the years to come.
“People of the future will find they can get themselves out of trouble, and they’ll borrow more than they need,” Daniels told CNBC. “The cost of college will go up.” “They have to put colleges like ours in trouble as part of this outstanding debt. We have to support our performance,” he added.