U.S. President Joe Biden announced a sweeping effort last week to cancel up to 20,000 U.S. dollars in student loan debt for eligible borrowers. The decision has sparked controversy in the country.
The report pointed out that "whatever your opinion is on Biden's motives," the decision will help 43 million people who've been swept into a complex and undeniably broken system, while it doesn't even begin to solve the problem.
The report said that it's not breaking news that college costs have skyrocketed and the economics behind tuition costs are complicated and vary by institution.
What feeds tuition inflation has more to do with the scale of the higher education system. The United States has a massive decentralized system of hundreds of nonprofit colleges, where the national government does not control prices. The country also has a large upper middle class that's willing to pay top dollar for their children's education, according to the report.
The report stated that some critics of the Biden administration's student debt relief worry about the precedent it sets.
"If the government creates an expectation that debts are likely to be forgiven, universities won't hesitate to raise tuition. Students may take on more debt, expecting some of it will eventually be wiped clean," said the report, noting that "Bottom line, canceling debt certainly doesn't push tuition costs down."
Some critics of the Biden plan have suggested a better solution would be to treat student loan debt like any other consumer debt: Let the bankruptcy courts handle it, the report added.
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