Joe Biden cancel student loan Prior to abortion rights being in the headlines in the last week, student loans and competing
ideas on how to manage the $1.7 trillion in debt owed to more than 40 million Americans were
at the forefront of the White House’s priorities. President Joe Biden seems to be looking into a
plan to wipe out at minimum a certain amount of the debt before the current grace period for
loan payments run out in September, just weeks before the midterm elections.
Biden wasn’t an advocate of using the presidency to cancel debts however, after having a
meeting together with representatives of his Congressional Hispanic Caucus last week and
having to contend with declining approval ratings during the midst of an election, reports
suggest that action could be becoming. The chief of staff and press secretary Chief of Staff have
both indicated that they’ll announce a plan to extend the current pause in payments for a second
time to allow more time to come up with the decision.
Biden has already extended the pause 4 multiple times (former President Donald Trump issued
the first interruption, which was then extended twice) which is about 200 billion in savings
However, the pressure on left-wing activists and Democratic lawmakers is growing. Experts in
the field of student loans has told Vox it’s crucial to utilize two different frames to comprehend
what type of debt relief is in the pipeline and the amount that will be forgiven and who would be
the beneficiary of this forgiveness.
Progressives would like Biden to be a big man and push for the highest amount of forgiveness
while ensuring the least restrictive qualifications for eligibility. They claim the stakes are
extremely high for Biden and his political party due to the likelihood that Democrats will lose
control of Congress in the coming elections, in part due to the low turnout from Democratic
voters during midterm elections as well as the lack of enthusiasm from young, activist-minded
voters and the party’s base.
One scenario is: Biden will cancel up to $10,000 in student loans
This is likely. At the time of 2020’s Democratic primary, Biden said he supported legislation in
Congress to eliminate the possibility of up to $10,000 in student loans, whereas his opponents
to the left advocated for more ambitious ideas. There are reports that indicate Biden has since
become more open to executive actions to stop federal loans, however, he isn’t likely to pursue
this option with no requirements.
“[T]he objective, as it should be, is to ensure that it’s targeted to people who require assistance
in the greatest need,” White House press secretary Jen Psaki said last week. Officials from the
administration has been discussing the eligibility requirements that might include an income
a limitation that is based on taxes or pays statements (likely to be the $125,000 limit on income)
and the type of institution that a borrower attended was a private or public school, the type of
a loan made, and if the loan was utilized to fund graduate or undergraduate studies.
This move will definitely offer relief by removing the debt of around 32 percent of the borrowers
roughly 13 million people according to the analysis done to be used by Senator. Elizabeth
Warren (D-MA) by scholars from the Roosevelt Institute, a progressive think organization. 2
million Black borrowers would have their debts eliminated, and for those who currently are in
debt more than at the time they took out the loan, this amount of relief would erase fourteen
percent of borrowers.
However, the average amount of student debt Americans are owed is roughly $30,000, which
means that the majority of those who have debt are still in debt for the cost of paying.
Forgiveness in any amount isn’t popular with conservatives and progressives like Rep.
Alexandria Ocasio Cortez (D-NY) claims that this figure won’t be an impact on a lot of people. It
will cost around 373 billion to implement roughly the amount that the federal government has
allocated to the welfare program (the Temporary Aid for Families in Need program) over the past
Yet, this decision is gaining broad acceptance and is popular with younger people. If the
cancellation of any student debt is a factor in inflation, this strategy will cause the least harm.
Another scenario is: Biden can cancel anywhere between $10,000 to
$50,000 in student loans
This is a bit more unlikely but isn’t possible. Biden has indicated that he’s contemplating a limit
of less than $50,000 of compensation per person. That’s roughly the amount Warren has
demanded. Senate Minority leader Chuck Schumer (D-NY) has requested.
Biden is likely to not go over the maximum amount of dollars here and will likely stick to the
income limit of $125,000 I was told by experts. However, any additional $10,000 of relief above
the initial $10,000 could make a huge difference for those who are the least financially secure as
per those who are the Roosevelt author: “Every dollar of student debt cancellation is important, however, bigger is more beneficial for improving racial equity and economic security.” Charlie
Eaton, an assistant professor at UC Merced, and four other scholars wrote.
With a relief of $20,000 debt relief, the student loan debt of the majority of borrowers, around 20
million people could be eliminated. Each increase of $10,000 is reflected in an almost 10%
growth of borrowers who are debt-free. But the full figure of $50,000 will cost around $1 trillion —
much more than the amount that has been allocated to Pell Grants or housing assistance since 2000. The plan is not as popular but has widespread acceptance from Democrats or
independents as well as younger people. It could also increase inflation, although not as
significantly as total debt cancellation.
A third possibility: Biden eliminates all loans for students to all borrowers,
or for borrowers who have greater than $50,000 in debt
This is a very unlikely chance of being realized, but just because Biden has stated there is over
$50k of relief is not on the table. The total $1.7 trillion costs will be higher than the federal
The government has splurged on an earned income tax credit or the unemployment insurance
program and it would raise the rate of inflation by 0.1 to 0.5 percent in a 12 month period
according to the conservative fiscal committee for a responsible Federal Budget. The universal
debt cancellation plan would significantly be beneficial to the most wealthy Americans as the
majority of outstanding debt is owed to people who have master’s degrees.
However, progressives are pushing this solution the most strongly and groups such as those of
the Student Debt Crisis Center are insisting on the suspension of eligibility requirements and
applications. This is where the tension lies in that focusing relief on all will go a long way to
ensure that the most disadvantaged borrowers get the majority of the aid, but there is a
problem: the Department of Education lacks the ability to put in place an extensive screening
process to evaluate applications. As of now, the Department is working to roll out smaller,
specific relief initiatives that the Biden Administration has implemented according to Adam
Minsky, an independent student debt attorney.
“Even if it’s a bit general requirements there’s a myriad of legitimate concerns that any kind of
means-testing or other means to limit eligibility could create a massive issue on a purely
administrative level,” he said. “The Department of Education is already in a bind trying to swiftly
take on all the changes. Now you’re likely to add another thing to the mix that could affect the
lives of millions or millions of people who are borrowers.”
It’s unlikely that they will. However, any of these actions could be a risk to the political system.
While some form of relief may be popular, however, it’s not the main priority of the majority of
people. The Atlantic’s David Frum has written the forgiveness of student loans carries the risk of
being perceived by some as “a tax on voters that are the ones that Democratic Party most
desperately needs to win back,” those who have not been educated in college or working-class
Americans and also slowing efforts to tackle inflation, and leaving only a few among the more
progressive members of his party content.
Whatever path is taken, Natalia Abrams, the president of the Student Debt Crisis Center,
informed me that progressives will be victorious in at least one fight. The legal authority of the
president to cancel student debt remains an open issue, however “if this happens
then-President Biden will agree that the president, as well as the Department of Education, do
have the power to cancel student debt” Abram said. “We are able to continue pushing for more.
We could agree on the fact that it’s a lever, and If they are able to make $10,000 a cancellation,
they can make a decision to cancel $50,000. They can then make a decision to cancel all of it.”