Democratic lawmaker Ro Khanna has called for public colleges to be made free due to concerns that President Joe Biden’s student loan debt cancellation program will prompt schools to hike up the prices of tuition.
Rep. Khanna (D-Calif.) made the comments on Fox Business Network’s “Cavuto: Coast to Coast” on Aug. 30.
While he voiced support for Biden’s loan forgiveness program, the lawmaker said he was concerned that schools would raise prices for students due to the fact that the debt obligations of students have decreased.
Host Neil Cavuto asked, “What’s to stop, though, Congressman, a college or university from just continuing to do what they’ve done for decades now, just keep raising their tuition, room, and board prices because now they know prospective students, their debt obligation just went down?”
“It’s an important issue,” Khanna replied. “And that’s why I have proposed that we have public college be free and those grants be tied to not having large tuition increases. That’s actually what we had in this country from 1860 to 1960.”
“The land grant universities were basically free, then we had state budget cuts. But if we go back to that, and tie this—the money to not having inflation—to increases beyond inflation, then you would get the cost of college under control,” he said.
Biden announced on Aug. 24 that his administration would cancel as much as $20,000 in federal student debt for Pell Grant recipients and $10,000 for other borrowers making less than $125,000 annually.
Pell Grant recipients are typically from low-income households, and the relief is provided to help them cover their college expenses.
Benefiting Top Earners
The Penn Wharton Budget Model, a nonpartisan group at the University of Pennsylvania’s Wharton School of Business, states that the student loan forgiveness program will cost between $469 billion to $519 billion over the next decade, although the exact figure depends on whether existing and new students are included.
Roughly 75 percent of the benefit will fall upon households making $88,000 or less per year, according to the group.
Republicans on the House Budget Committee, in a statement released on Aug. 28, said the plan would cost U.S. taxpayers more than $330 billion and that 70 percent of those who benefit from the plan would be in the “top half of the income spectrum.”
GOP lawmakers have also raised concerns over whether Biden even has the authority to grant such wide-reaching debt relief to students.
Education Secretary Miguel Cardona has said the administration’s move is justified under the HEROES Act of 2003, which allows his department to provide relief in response to a national emergency.
However, others fear the move will also raise the national debt, which currently stands at around $30.6 trillion, according to the Treasury Department. That is at a time when inflation is at a 40-year high in the country.
“Americans are already struggling under record-high inflation,” GOP members on the House Ways and Means Committee said in a statement on Aug. 24. “Forgiving $10,000 of student loan debt per person does nothing to bring down inflation, and will only exacerbate the rising cost of higher education rather than address it.”
Former Obama administration economic advisor Larry Summers has also warned that the mass student loan cancellation could serve to further exacerbate inflation, noting that “student loan debt relief is spending that raises demand and increases inflation” and that it will also “tend to be inflationary by raising tuitions.”
The Biden administration, however, has said that the student loan forgiveness program will allow people to “start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business.”