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Student loans: Politicians debate long-term cost of President Biden’s debt plan

Yahoo Finance Contributor Kevin Cirilli jions the Live show to discuss criticism to President Biden's student loan forgiveness plan.

Video Transcript


AKIKO FUJITA: President Biden's landmark move to cancel huge swaths of student debt has been met with elation and some criticism in almost equal measure. Assessing the cost of the plans has been equally as controversial. Some estimates coming with a price tag of almost $1 trillion. Let's bring in Yahoo Finance's contributor Kevin Cirilli, joining us from Washington DC. And, Kevin, the thinking behind this move was that this could potentially give the president and the Democrats a bigger bump going into the midterms. What have we seen so far in terms of the backlash that's come with this?

KEVIN CIRILLI: Well, there's been a lot of backlash, especially from conservatives, and even from some centrist Democrats, including a former Obama economist, Jason Furman, who tweeted out just within the last couple of days that this is something that, quote, "Pouring roughly half a trillion dollars of gasoline on the inflationary fire that is already burning is reckless. Doing it while going well beyond one campaign promise and breaking another is even worse."

Beyond that, you alluded to this, but the Penn Wharton School-- Wharton School of Business at the University of Pennsylvania has come out and said that this could cost $1 trillion. And even additionally to that, many states are weighing-- conservative states are weighing whether or not to even file lawsuits to see whether or not the president has the ability to do this.

The politics of this are actually somewhat interesting because you've had Speaker Pelosi give a tacit behind-the-scenes endorsement of this policy. You've had Senate Majority Leader Chuck Schumer come out and say that he very much supports it. But then you've got this more populist debate brewing beneath the surface. And you've got Democrats who are saying, OK, well, this is something that they could get on board with.

But Republicans also saying, this does nothing to keep the cost of tuition down, and it also does nothing to provide transparency for how taxpayer-funded state schools and state-related schools, how that money is being invested or endowments of private institutions are being invested not just in the private sector but in foreign governments. I'm thinking, of course, of China. And so there's a lot of transparency to this that this does nothing to address at all.

AKIKO FUJITA: And so, Kevin, with that said, we are just over two months out from the midterm elections. This being one of the many issues that are out there. Where do things stand? I mean, are we still seeing this momentum shifting back to the Democrats?

KEVIN CIRILLI: Well, as it relates to student aid and student debt, here's what I would say. I think so much of this debate has been focusing from the Washington perspective and Republicans versus Democrats. But let's think about Americans who have not received a college education. And let's think about it from their perspective for a second, that the debt relief that's being provided is only impacting those who have received a college diploma. And that could be interpreted as being unfair if you made a calculation earlier in your life not to pursue a college degree but to pursue another means of entering into the workforce to all of a sudden have your tax dollars paying for someone else's debt relief.