Keystone Today

Federal aid for college has increased over the last several decades, according to an editorial report by Issues and Insights, and a new study by the Wharton School on President Joe Biden’s student loan forgiveness plan shows that it is estimated to cost $270 billion yearly. 

"If the past decade’s aid spending remains constant, the federal government will be spending upward of $270 billion a year subsidizing colleges. (That compares with $140 billion a year for food aid.)," the Editorial Board at Issues and Insights says.

President Biden announced on August 24 that borrowers making less than $125,000 per year are eligible to have $10,000 in debt cancelled. Borrowers who went to school on a Pell Grant can have $20,000 in student debt forgiven. The pandemic-era payment freezes have also been extended through the year, according to Fox News.

The student loan forgiveness plan is supported by most Democrats, which includes U.S. Senate candidate John Fetterman of Pennsylvania, who took to Twitter in April to advocate completely cancelling student debt.

"PA has the 3rd highest rate of student loan debt in [America] If we can spend hundreds of BILLION$ to bail out Wall Street, we can take action to cancel student loan debt,” Fetterman tweeted.

The Penn Wharton Budget Model shows that President Biden’s new student loan forgiveness plan includes debt cancellation, loan forbearance and income-driven repayment programs. It also shows that the plan is estimated to cost $605 billion under “strict static” assumptions. “Non-static” changes could make this number closer to $1 trillion, however.

According to the editorial by Issues and Insights, the College Board reports that federal aid given through the 2020-21 school year is $134.4 billion. Over the last decade this number hit $1.7 trillion. States have given another $119 billion, and adding grants from institutions, individuals and employers, the college aid amount over the last 10 years is $2.6 trillion.

The editorial piece calls college education “an investment in yourself.” It adds that the intention is to “pay dividends for the rest of a person’s life in the form of higher earnings.”

“So why do taxpayers (most of whom never got a college degree) have to spend so much of their hard-earned money subsidizing others’ educations?" the Issues and Insights editorial states.

Experts told Fox Business that Biden’s plan could cause an increase in college tuition prices for the future, and increase inflation.

"Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition," Brian Riedl, a senior fellow in budget, tax and economic policy at the Manhattan Institute, said to Fox Business. "This is pretty similar to the fact that historically 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes.”

According to research from the College Board, "Between 2006-07 and 2021-22, the average grant aid per first-time full-time in-state student at public four-year colleges increased by $3,740 in 2021 dollars, from $4,360 to an estimated $8,100; the average published tuition and fees in this sector increased by $3,010, from $7,730 to $10,740."