Is tax money used? Is anyone profiting from the program? Do colleges lose money? Please don’t make this political. I’d genuinely like to understand without all the talking point bullshit.
In: Economics
The tax money was already spent, so in a very technical sense no money changes hands. But this is a foolish way to look at it.
In the original accounting, public money was spent at some point in the past, but the arrangement was revenue-neutral (e.g. the loans would be paid back, so the government wasn’t losing money on the original deal). When the loans are forgiven, the new deal has the government losing money instead. This (in effect) costs money, because the repayment of the money would have funded other government services, and the loss has to be made up by either reduced spending, higher taxes, or debt. There’s no free money hack, for all practical purposes the government is in exactly the same position as if it had written an equivalent-sized check and given it away.
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