Goldwein Testimony Highlights $970 Billion in Student Loan Cancellation
CRFB’s Marc Goldwein testified to the House Subcommittee on Higher Education and Workforce Development, on March 23, on the $970 billion recently spent or allocated toward debt cancellation, the repayment pause, Income-Driven Repayment (IDR) changes, and other student loan policies.
Goldwein's testimony, which can be read here, argued that these recent policies are costly, inflationary, economically and financially unjustified, poorly targeted, and would ultimately result in more borrowing, higher tuitions, and more low-quality degrees.
Goldwein’s testimony showed the $970 billion cost of these policies is more than all federal spending on higher education over the nation’s entire history ($744 billion from 1962 to 2019). The policies will also cost three times what we are projected to spend on Pell Grants this decade, eleven times the cost of the President’s free community college plan, and as much as increasing the child tax credit by $1,400 per child.
The testimony explained why the repayment pause and other student loan policies are no longer economically justified, could boost inflation by up to 27 basis points, increase recession risk, benefit high-income professionals, and negatively impact tuition and institution accountability.
The hearing also included witness testimony from Dr. Adam Looney, Director of the Marriner S. Eccles Institute and Clinical Professor of Finance, who called attention to the regressivity of the President’s student loan policies and the need for more accountability in the loan system; Mr. Sameer Gakaree, President of the Institute for College and Success, who argued that the President’s policies will address the consequences of rising student debt and advocated for reforms that make college more affordable and accountable; and Dr. Carlo Salerno of Company Confidential, who called for sustainable debt reform that would have colleges share in the repayment risk while also simplifying loan and repayment options.
Throughout the hearing, a number of compelling questions were raised by various members of the Subcommittee. There was discussion over the ideas that debt cancellation is likely the most costly executive action in history by a factor of two, that the benefits to those who receive debt cancellation would be borne by those who face higher prices, that current levels of student debt would return in just five and a half years under the President’s cancellation plan, and that growing national debt represents a major economic challenge.