The Congressional Budget Office (CBO) released an estimate on Monday that the Biden administration's executive action on student loan forgiveness could cost the country $400 billion over the next 30 years.
Since then, Republicans have ramped up their criticism of the Biden plan.
Senator Richard Burr of North Carolina, the Health, Education, Labor and Pensions Committee's ranking Republican, issued a statement arguing the administration had "lost all sense of fiscal responsibility" and "opted to bury the American people under our unsustainable debt."
And while Senate Republican Leader Mitch McConnell condemned the move as "unfair," Independent Senator Bernie Sanders of Vermont, who also sits on the Education committee, said it is an issue of fairness, but not in the sense that McConnell believes.
"Number one, I didn't hear the Republicans worry about the deficit when they provided a trillion dollars in tax breaks to the 1%, large corporations," Sanders told Newsweek. "So, at a time when the very, very rich are getting much richer, Republicans felt just fine about massive tax breaks for the rich and large corporations."
"Second of all," Sanders added, "by forgiving student debt for working families and lower income people, you put money into the pocket of people who can go out and start getting the things they need, which I think will have a positive effect on the economy."
The Education Data Initiative reports that student loans have become the largest consumer debt category in America, second only to home mortgages.
The Biden administration's executive order forgives $10,000 worth of loans borrowed by those whose income totals less than $125,000. Those who received Pell Grants, a federal subsidy offered to those who display "exceptional financial need," are eligible for $20,000 worth of debt relief.
Think tanks, including the Roosevelt Institute and the Center for American Progress, have published articles that are in agreement with Sanders' view, both arguing that the policy would help Americans build wealth.
In 1970, when only 11% of Americans had a college degree, middle income earners held a 62% share of aggregate U.S. household income, with upper income earners having 29% and lower income earners holding 10%, the Pew Research Center reports.
By 2018, the number of Americans who had a college degree had increased to 35%, and the share of the upper income earners had increased to 48%, while the middle earners' share fell to 43% and the lower earners dropped to 9%.
Alongside this trend, as Sanders noted, has been a dramatic rise in corporate profits. In the second quarter of 1970, U.S. corporate after-tax profit totaled more than $55 billion. In the second quarter of 2022, that number topped $3 trillion, according to the Federal Reserve Bank of St. Louis.
For Sanders, the debt forgiveness measure is about addressing the needs of ordinary American people in difficult financial times.
"I think we don't pay enough attention in general to what's going on with working people and lower income people today, and many of them are really struggling," Sanders told Newsweek.
"And I think too many folks here receive large amounts of campaign contributions from the wealthy," he added, "and are worrying about the rich and the powerful rather than the needs of working families."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Alex J. Rouhandeh serves as Newsweek's congressional correspondent, reporting from Capitol Hill and the campaign trail. Over his tenure with ... Read more
To read how Newsweek uses AI as a newsroom tool, Click here.
