President of Purdue University calls student loan forgiveness a 'gift to the wealthy' and the 'most regressive policy idea we've seen'

• Purdue University President Mitch Daniels said student-debt relief is "a gift to the wealthy."
• Daniels appeared to cite a study that found debt relief would primarily benefit high earners.

Purdue University President Mitch Daniels told CNBC on Wednesday that he believes student loan forgiveness will worsen the inequities it was designed to remedy, calling it "the most regressive policy idea we've seen."

"It's a gift to the wealthy," Daniels, the former governor of Indiana, told CNBC's Squawk Box. "Doctors and lawyers are the two categories who would benefit the most. Only 5% even of the most modest suggestion would go to the bottom quintile."

Daniels appeared to be citing a study from the University of Chicago published last year, which found student-debt cancellation ranging from $10,000 to full forgiveness would redistribute income upward, as nearly half of all the student debt belongs to individuals pursuing careers in high-income fields.

The University of Chicago study, which has also been referenced by the Committee for a Responsible Federal Budget, found that only 5% of the debt relief would benefit individuals in the lowest-earning tier.

The benefit to future high earners has been a consistent argument against student-loan relief. However, as Insider previously reported, loan forgiveness could boost the economy, as well as benefit minorities and low-income households.

White House Press Secretary Jen Psaki confirmed last week that President Joe Biden is considering student-debt forgiveness for borrowers who make less than $125,000 a year. Under the policy, about 79% of student-debt borrowers would qualify, Matt Bruenig, founder of the left-leaning People's Policy Project, previously told Insider.

Biden said during a speech in April that a decision on student-loan forgiveness will be made "in a couple of weeks."

Daniels, a former Republican governor, appears to be echoing the sentiments of many in the Conservative Party. Sen. Susan Collins (R-Maine) previously told Insider loan forgiveness is "not fair" to those who repaid their debt over many years.

Last year, analysts from JP Morgan said income limits could make student-debt cancellation "less regressive." But some Democrats have spoken out against income ceilings, including New York Rep. Alexandria Ocasio-Cortez

"I don't believe in a cutoff, especially for so many of the frontline workers who are drowning in debt and would likely be excluded from relief," Ocasio-Cortez told The Washington Post in April. "Canceling $50,000 in debt is where you really make a dent in inequality and the racial wealth gap. $10,000 isn't."

Ultimately, Daniels argued that forgiving student debt today means the same generation will be paying for the added national debt for years to come.

"People in the future will figure they can get off the hook too and will borrow more than they should. That'll push up college costs," Daniels told CNBC. "They should put colleges like ours on the hook for some of this unpaid debt. We should have to stand behind our performance," he added.