Why Biden is resisting pressure to cancel $50,000 of student loan debt to every borrower 2022-04-28 17:23:18


Lawmakers within his party continue to put the issue front and center, urging the president to cancel $50,000 of each of the 43 million federal student loan borrowers. – Something I drop over and over, including on Thursday.

But these moves have done little to ease political pressure.

“Borrowers don’t just need to pause their debt; they want to erase it,” Schumer said from the Senate floor.

“With the flick of a pen, President Biden can give millions upon millions of student loan borrowers a new lease for life,” the New York Democrat added.

Pressure mounts in a midterm year and as recent polls show Biden’s approval rating Continues to decline with young Americans.
More than 100 Democratic members of Congress have signed letter She wrote to Biden last month urging him to “cancel a large amount of student debt.” A handful of progressive lawmakers, including Senator Bernie Sanders from Vermont and MP Pramila Jayapal From Washington State, he appeared with student debt cancellation organizers outside the White House on Wednesday to show their support.
Senator Bernie Sanders of Vermont speaks at a student debt cancellation rally near the White House on April 27 in Washington, DC.
So far, Biden has resisted pressure to cancel $50,000 of student loan debt per borrower. On Thursday, he doubled down on his position Leaving the door open for some sort of student debt cancellation.

“I’m thinking about dealing with some debt relief,” Biden said at the White House after unveiling new funding for Ukraine. “I’m not thinking about $50,000 debt relief.”

“But I’m in the process of taking a closer look at whether or not there is anything there — there’s going to be additional debt forgiveness, and I’ll have an answer to that in the next couple of weeks.”

Later Thursday, White House Press Secretary Jen Psaki confirmed that “no conclusion has been reached on any internal process yet.”

There are several reasons why Biden is resisting withdrawing from the left wing of his party.

Legal authority is unclear

Biden made it clear during his presidential campaign, after the Covid-19 pandemic began, that he supports the partial cancellation of federal student debt.

His campaign proposal called for the immediate cancellation of at least $10,000 in student debt per person in response to the pandemic, as well as the forgiveness of all federal student debt related to college tuition from two- and four-year public colleges and universities for those borrowers who earn up to $125,000 in the year.

But he also urged Congress to take action to cancel the debt, rather than saying it could use the executive branch to do so.

It’s not entirely clear if the president’s executive branch allows him to wipe out student debt on a large scale. Last year, Biden directed attorneys at the Departments of Education and Justice to assess whether he had, in fact, the ability to cancel federal student loan debt on a large scale. The administration did not disclose those findings.

But in September 2020 note From attorneys at Harvard University’s Center for Legal Services and its Project on Predatory Student Lending, he argues that Congress has broadly granted the power to cancel federal student debt to the Department of Education through a law known as the Higher Education Act. The memo says it gives the Secretary of Education the authority to “create, cancel, or amend debts owed under federal student loan programs.”

Inflation is a major issue for voters

It may seem counterintuitive to borrowers who would benefit from debt cancellation, but some experts say Foregoing student loans may increase inflation. This is Trouble for Biden and other Democratswho are blamed for the high prices of gas and groceries.

Millions of people will be able to spend the money — roughly $4 billion a month, according to one estimate — on things other than monthly student loan payments. And people may be more likely to make large purchases, such as cars or homes, if they no longer have student debt hanging over their heads.

a Report From the Responsible Federal Budget Committee He estimated that eliminating all of the $1.6 trillion in federal student loan debt would increase the inflation rate by 0.1 to 0.5 percentage points over 12 months. Canceling $50,000 per borrower would result in a smaller increase, but the group did not estimate that effect.

It’s not a giant,” said Mark Goldwyn, senior vice president and senior policy director at the Committee on Responsible Federal Budget.

“In a normal inflation environment, that wouldn’t be a big deal. But we are in a very critical situation right now and we risk getting inflation out of control,” he added.

Debt Cancellation Can Benefit Many Rich People

Biden has repeatedly said he is committed to making sure wealthy Americans pay their fair share and has proposed raising taxes on the richest Americans. Student debt cancellation may conflict with this policy goal.

Eliminating student debt for everyone would disproportionately benefit families with higher wealth, such as those with doctors and lawyers, because these borrowers tend to increase student debt after attending graduate school. As of 2019, families with higher degrees owe 56% of outstanding education debt.

More targeted approaches, such as canceling debt for borrowers who earn less than a certain income threshold or canceling loans borrowed only for bachelor’s degrees, can help ensure more benefits reach Americans who need it most.

Here's Who Qualifies for Student Loan Debt Relief After Biden's Recent Actions
“If you target primary, more money will go to lower-income borrowers,” said Adam Looney, a nonresident senior fellow at the Brookings Institution. Who has the Study student debt relief policies.
However, canceling student loan debt will not solve the fundamental problem of college affordability. Biden has also campaigned to make community colleges free, a move that requires action from Congress, but that proposal has been Pieces of his Build Back Better Agenda.

“If you don’t fix the system, these problems will recur and we’ll go back to the same crisis we’re in now,” Looney said.

Biden has indicated that he would be open to excluding high-income borrowers from canceling student loan debt, arguing last year The government should not forgive debts for people who went to Harvard, Yale and Penn.

Psaki said Thursday that the president continues to consider some sort of means test when it comes to canceling the loan.

“He’s talked in the past about how he doesn’t think millionaires or billionaires should benefit – or even high-income people – and that’s definitely something he will look at,” she said.

To date, Biden’s actions have provided more than $17 billion in student debt relief to 725,000 borrowers. About $3.2 billion This was canceled for borrowers who had been defrauded by their for-profit colleges.

CNN’s Kevin Liptak contributed to this report.