Canceling student debt would be 'very unfair' and favor those who make 'lots of money in their lifetime,' former Fed Chair Bernanke says

Former Federal Reserve Chairman Ben Bernanke
Former Federal Reserve Chairman Ben BernankeKatie Kramer/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images
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  • Former Federal Reserve Chair Ben Bernanke told the NYT canceling student debt would be "very unfair."

  • He said many that would benefit from the relief would end up making lots of money.

  • This is a concern shared by a number of Republican lawmakers that are against broad debt relief.

A former chair of the Federal Reserve thinks President Joe Biden should think twice about canceling student debt.

"It would be very unfair to eliminate," Ben Bernanke, who served in the Fed from 2006-2014, told The New York Times. "Many of the people who have large amounts of student debt are professionals who are going to go on and make lots of money in their lifetime. So why would we be favoring them over somebody who didn't go to college, for example?"

His views on student-loan relief are ones shared by many conservatives who believe debt relief will help the wealthy, and not the low-income earners who need it most. As Insider previously reported, Republican lawmakers are growing increasingly concerned Biden will actually cancel some student debt, which he pledged to do on his campaign trail. The president recently said a decision on relief will be made in the coming weeks — and before the pause on student-loan payments expires at the end of August — and the question now is focused not so much on whether debt cancellation will happen, but how much.

This has critics of student-loan forgiveness worried. Along with the argument student-loan forgiveness will benefit the rich, some lawmakers like Sen. Mitt Romney of Utah called the potential relief a "bribe" to help Democrats win votes at the midterm elections. Others, like top Republican on the House education committee Virginia Foxx, have frequently cited the cost the pause on student-loan payments had on taxpayers and argued canceling the debt will exacerbate inflation.

Advocates for student-loan forgiveness, though, remain adamant that canceling student debt will stimulate the economy and benefit low-income borrowers. Massachusetts Sen. Elizabeth Warren — a leading Democrat pushing for $50,000 in forgiveness — said during a recent Senate hearing that "opponents of student loan cancellation are living in a bubble of privilege that is completely disconnected from the reality of the people who borrow money to get an education."

"99.7% of borrowers did not get an Ivy League degree," Warren said. "Heck, 40% of them didn't get any degree at all. The majority of these loans are held by people with zero wealth. And Black borrowers are not just treading water trying to keep up with their payments – they're actually falling behind. "

It's unclear what relief Biden will end up implementing. He already ruled out $50,000 in forgiveness, and while reports have suggested he's considering relief for those making under $125,000 a year, Politico reported the Education Department does not have the ability to cap relief based on income on its own.

That's why advocates like Wisdom Cole, NAACP's national director of youth and college, want Biden to go big and broad with student-loan forgiveness.

"President Biden, well-off, predominantly white doctors and lawyers may benefit from $10,000 in cancellation, but that won't do much to reduce the racial wealth gap, nor address the oppressive system in America," Cole said in a statement. "Through generations, Black people have been drowning in debt. We're concerned that the White House just simply doesn't get the devastating impact of student loan debt on Black people. Anything as low as $10,000 in cancellation would be a slap in the face."

Read the original article on Business Insider