Voices: Corporate America is so angry about Biden’s student loan cancellation. I wonder why

This week, President Joe Biden made good on his campaign pledge and vowed to cancel $10,000 in student federal loan debt for borrowers with an annual income of less than $125,000. For the 45 million Americans still crippled with student loan debt, at a time of increasing cost of living, this is not nearly enough. If we were able to cancel Paycheck Protection Program (PPP) debts for business, you’d think the funds could be found to cancel student loans too.

PPP was instituted by former President Donald Trump as a means for businesses to pay their workforce and cover overheads during the Covid pandemic. The debt from those loans was ultimately forgiven. The average loan equated to $107,000 per business, totalling a colossal $800 billion in low-interest loans altogether. Beneficiaries included celebrities such as Tom Brady, Reese Witherspoon, Kanye West and even Trump’s former adviser and son-in-law Jared Kushner, who received over $6 million in loans in companies registered under his name. Jared Kushner called student loan forgiveness “a really bad idea” after Biden announced the proposal. Even Amazon delivery contractors received millions in those PPP governmental loans, despite Amazon seeing profits soar by 220 percent during the pandemic.

This widespread focus on pro-corporate policies in America has resulted in mounting profits for large businesses while the average American feels the pressure of growing inflation. Even with increasing supply chain costs, corporations are reaping record profits. Energy company Shell, for example, this year reported triple its profits from the previous year, despite consumers being hit with all-time high prices at the gas pump.

Senator Mitt Romney, who introduced a bill to extend the PPP loan deadline in 2020 and who later supported PPP loan forgiveness, reacted to the news of Biden canceling just $10,000 of student debt per person by tweeting: “Sad to see what’s being done to bribe the voters. Biden’s student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way & creates irresponsible expectations.” He had no such thing to say about corporate loans.

Thanks to decades of reducing market regulation and pro-coporate policies, the wealth inequality gap in the US continues to increase. PPP loan forgiveness is just another example of a growing phenomenon. When 9.6 million Americans lost their jobs due to the pandemic, policies in Washington were put in place to bolster the economy — and over $1.5 trillion was injected into Wall Street, supporting some of the world’s largest companies.

Senator Bernie Sanders, highlighted this hypocrisy recently, writing: “If we could afford to cancel hundreds of billions in PPP loans to business owners in their time of need, please do not tell me we can’t afford to cancel all student debt for 45 million Americans”. The total cost of all student loans is approximately $1.7 trillion, and 15 percent of student loans are in default at any given time. It is this educated American society that has helped prop up the corporations that have been basking in the monetary rewards, while former students continue struggling with mounting debts, often barely even paying back the interest.

According to the Education Data Initiative, the average student loan debt is over $37,000 — with some borrowers, such as medical students, navigating debts in the hundreds of thousands. And with many graduates unable to keep up with their payments, student loan refinancing firms have stepped in to profiteer further. SoFi, for example, a student loan refinancing company which had $400 million spare to pay for the sponsorship rights to the LA Rams and Chargers home, charges students struggling with repaying their debt between 2.24 and 7.99 percent APR. The same company also managed to afford awarding its CEO, Anthony Noto, a 92 percent raise this year.

The struggles with student loans only appear to be mounting. Interest rates for student loans continue to increase with the latest rate reaching 4.99 percent for undergraduate loans and 6.54 percent for graduate loans — that’s up from 3.73 percent and 5.28 percent respectively. Such high rates alongside rising tuition fees — fees increased by 169 percent between 1980 and 2020 – and stagnant wages mean that some students will never be able to pay off their debts. The total cost of student loan debt has increased faster than income has, growing from $750 billion to $1.7 trillion in the last 10 years. Where exactly does this end?

Critics of student loan forgiveness have questioned whether such policies would exacerbate inflation rates. Indeed, according to a CNBC survey, 59 percent of Americans are worried that inflation rates would increase with student loan forgiveness. According to the Roosevelt Institute, however, the increased income will not drive further spending, as those struggling with student loans are already finding it difficult to keep up with the average cost of living. The Committee for Responsible Federal Budget’s own accounts state that student loan debt relief will have minimal impact on inflation.

With the growing wealth inequality found across America, as well as rising inflation and cost of living prices, it is time we support the average Americans with their day-to-day struggles. The thousands of dollars’ worth of debt former students have accumulated with the promise of better income has failed to reap the rewards they had expected. Their exponentially increasing debt means that they can’t accrue enough savings to better themselves or even to live normally — not with salaries that have failed to keep up.

Just as we have continually bailed out large corporations in the past, it is time we also forgive student loans fully and give average Americans a chance to succeed too.