President Biden will make a decision on whether to cancel a portion of student loan payments soon. Education Secretary Miguel Cardona believes the announcement will come as early as tomorrow.
The pause on student loan payments started at the beginning of the COVID-19 pandemic in March 2020. The latest extension last until August 31, and the White House has till then to make a decision on what to do next. Biden is thinking over a plan to cancel $10,000 in debt per student, according to USA Today. Only families making $125,000 or less would be eligible for this debt cancellation. The plan will not apply to those with private loans, only federal ones. Based on data from the Education Data Initiative, federal student loan debt is held by 43 million people. The average debt is $37,000 per borrower, bringing the outstanding balance to $1.6 trillion.
Not Good Enough
The proposed cancellation of $10,000 in student loans does not go far enough for some progressive democrats. Groups like the Congressional Black Caucus and the NAACP have wanted more debt to be canceled. Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass have been pushing to get $50,000 in debt canceled. Some liberals have called for Biden to do away with all debt entirely. The NAACP’s president and CEO Derrick Johnson is one of the advocates for more debt relief for students.
If the rumors are true, we’ve got a problem. And tragically, we’ve experienced this so many times before.
The eligibility for student loan forgiveness has been criticized for being too restrictive. We The 45 Million is an organization that represents borrowers seeking debt relief. The group’s executive director Melissa Bryne labeled Biden’s new plan as “an outrageous violation” since he promised to cancel the debt of every borrower.
The hoops of means testing means that millions and millions of borrowers won’t get help.
The income eligibility was meant to prevent wealthy families from benefiting from debt relief they do not need. Even still, some think the income requirement will only hurt those stuck in the middle.
The Politics Behind Debt Cancellation
The move to cancel some or all student debt could give the Democrats some sway over young voters. Student loan relief is a popular issue among left-leaning young people. Young voters are noticeably absent when it comes time for elections, especially ones that do not involve the presidency. Canceling student debt could help boost momentum for democratic candidates in the upcoming midterm elections. In retaliation, Republicans have framed student loan forgiveness as a tactic to benefit the liberal college elite and punish those who could not afford higher education. They have also been pointing to the rising inflation under the Biden administration as a reason against more debt relief.
Joe Biden has had a lot of bad ideas, but transferring billions in student loan debt to taxpayers – especially at a time of high inflation – might be his worst idea yet.
The Road Ahead for Student Loan Borrowers
This “tactic” could be undermined by the fact that people have been left unsure of what to do about a looming expense possibly coming in early September. While Washington hurries to decide on some measure, 40 million people have less than two weeks until student loan payments resume. Many borrowers are not ready to go back to paying as they were not given a chance to prepare.
The possibility of a higher default rate might encourage Biden to either extend the pause or cancel some debt. Biden is under a lot of scrutinies over how the student debt crisis is being handled. There is pressure to increase the amount forgiven and some pressure to not do anything at all. He also has to answer to millions of Americans left to hang in the balance, hoping to hear some ounce of news on where things are headed next for student loan borrowers.
Written by Chiagozie Onyewuchi
Edited by Sheena Robertson
Sources:
USA Today: Biden weighs canceling $10,000 in student loan debt, decision as soon as Wednesday; by Joey Garrison and Chris Quintana
CNBC: ‘It’s frustrating and stressful.’ 40 million people are in the dark about whether or not student loan payments will resume; by Annie Nova
Featured and Top Image Courtesy of Kevin Dooley’s Flickr Page – Creative Commons License
Inset Image Courtesy of Jessica Mercer’s Flickr Page – Creative Commons License
Discover more from Guardian Liberty Voice
Subscribe to get the latest posts sent to your email.