A Democratic Economist’s Case Against Biden’s Student-Loan Plan

This week, President Joe Biden announced debt relief for as many as 43 million Americans with government-issued student loans. The government is erasing up to $20,000 in debt for Pell Grant recipients earning less than $125,000 a year, and up to $10,000 for individuals who did not receive Pell Grants. In addition, the White House is planning to cap monthly payments for undergraduate loans at 5 percent of a borrower’s discretionary income and forgive the balance after a decade. The move, by various estimates, will cost the government $300 billion to $500 billion.

Biden first committed to student-loan forgiveness during the 2020 presidential race. His announcement on Wednesday was met with relief and joy among borrowers, as well as exasperation from individuals who have already paid off their student loans. It has also caused angst among some policy experts—not all of whom are on the right.

One of the most prominent voices criticizing the move is Jason Furman, a Harvard economist who chaired the Council of Economic Advisers during President Barack Obama’s second term. Furman