June 5, 2023

Student Loans

“A Republican measure overturning President Joe Biden’s student loan cancellation plan passed the Senate [last] Thursday and now awaits an expected veto. The vote was 52-46, with support from Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana as well as Arizona Sen. Kyrsten Sinema, an independent. The resolution was approved last week by the GOP-controlled House by a 218-203 vote.” AP News

The recently passed bill to raise the debt limit requires that the pause on student loan repayments, in place since March 2020, end on September 1. New York Times

See past issues

From the Left

The left argues in favor of student loan relief, and urges Biden to explore alternative methods.

Estimates show that 87 percent of the relief from Biden’s plan would go to individuals earning less than $75,000 a year, while none would go to those earning more than $125,000. Ninety-five percent of the total benefits would go to households making less than $150,000…

“Biden has previously said he would veto such a measure to block his plan; some thus argue the conservative Democrats’ votes are symbolic. But even if they are, the symbol is one of cowardice, of an incredible refusal to communicate to voters that a policy that uplifts millions of working people is worth pursuing at all.”

Prem Thakker, New Republic

“When Congress was negotiating a COVID relief package in March 2020, Biden argued from the campaign trail that the bill should cancel a minimum of $10,000 in debt per federal borrower. The legislation Trump ultimately signed didn’t cancel any student debt, but it paused payments and interest accrual. Biden promised additional relief. At a town hall just before the November election, he told voters, ‘I’m going to make sure everyone gets $10,000 knocked off of their student debt.’…

He can still attempt to salvage his campaign promise. If the Supreme Court strikes down his original order, Biden can cancel debt through a different avenue known as ‘compromise and settlement’ under the Higher Education Act of 1965. Under this authority, the Education Secretary can enter into settlements with debtors to lower the amount they owe or cancel their debt altogether…

“Conservatives would likely bring legal challenges to this authority, too, but it might have a better shot at surviving than his original debt-cancellation plan. Earlier this year, the Supreme Court denied a challenge to a compromise and settlement agreement that canceled $6 billion in debt for graduates of three for-profit schools.”

Julia Rock, Lever News

Student debt “is a racial justice issue. Due to systemic racism, Black and brown Americans have to borrow more money to achieve the same level of education. And even after achieving that same level of education, we are subjected to workplace inequities rendering us as statistically more likely to be underpaid, under-promoted, and undervalued no matter our field of employ…

“That doesn't mean the Republicans are totally wrong, though. People need to be accountable for their own financial decisions, and most of those who would be impacted by Biden's plan are not the truly destitute…

Partisan efforts at student loan reform are not actually helping the majority of Americans, regardless of racial identity. To meaningfully achieve such reform would require politicians to leave partisan lines and come together to find true long-term solutions focused on the prohibitive cost of an education these days.”

Carmen Black, Newsweek

From the Right

The right criticizes Biden’s plan, arguing that it is unfair and unconstitutional.

The right criticizes Biden’s plan, arguing that it is unfair and unconstitutional.

“Proponents of Biden’s plan would be quick to point out that… many borrowers are truly carrying unaffordable student debts relative to their earnings. And that’s true. But what they fail to mention are the existing programs that work to relieve borrowers with truly unaffordable debts. Under a set of programs called ‘income driven repayment,’ borrowers can make reduced monthly payments and have longstanding balances ultimately forgiven…

“These programs have had administrative challenges in recent years, but have still succeeded in supporting millions of borrowers with both reduced payments and forgiveness of outstanding balances. Since the truly struggling borrowers already had an avenue to having their balances forgiven, the real winners of Biden’s proposed cancellation plan would be those earning too much to be eligible for these programs: that is to say, borrowers who really don’t need the help.”

Beth Akers, American Enterprise Institute

Sens. Bill Cassidy and Chuck Grassley write, “What about the man who skipped college but is paying off the loan on his work truck, or the woman who worked her way through school and is now struggling to pay off her mortgage under Biden’s economy? Instead of debt relief, this administration will force them to pick up the bill. It is unfair that President Biden would punish them because their debts simply look different from those of his preferred class…

“Additionally, the Biden administration has extended the student loan repayment pause six times, long after the original, pandemic lockdown rationale. Costing $5 billion per month, the continued pause has cost the American people $195 billion so far. These policies are unfair to the ordinary Americans, 87% of whom have no student loans, who will now have to carry the financial burden of someone else’s student debt.”

Bill Cassidy and Chuck Grassley, Fox News

“With a wave of his hand last summer, Mr. Biden canceled $10,000 to $20,000 in debt for some 40 million borrowers, though he had earlier conceded it was ‘pretty questionable’ that he had the power to do so. Nancy Pelosi, then House Speaker, also said two years ago that ‘it would take an act of Congress, not an executive order, to cancel student loan debt.’ Who cares about the law when an election is nigh?…

“Under the Congressional Review Act (CRA), a majority of both chambers can vote to repeal a rule, though it still needs the President’s signature… This is the fourth bipartisan CRA resolution that Mr. Biden will have vetoed, which shows whose views are in the minority… The resolution sends a resounding message to the public and the Justices that the write-down couldn’t pass the democratic way. Let’s hope the Supreme Court sends a similar message to the President.”

Editorial Board, Wall Street Journal

A libertarian's take

The program “does nothing to address the underlying problem, which is out-of-control costs of college. As a result, we'd be right back at this exact level of student debt by 2028. It's a bandaid on a bullet hole, not a real solution (and a pretty damn expensive bandaid at that!)...

“And like any form of broad student debt relief, Biden's bailout primarily helps the relatively affluent and well-off… The Wharton School of Business estimates that even with the income caps, the vast majority of the plan's financial benefits—up to 73 percent—will go to the top 60 percent of income earners—the middle and upper-middle class. Only a relatively paltry 27 percent of the benefits will go to the bottom 40 percent of income earners, who are the actual poor and working class.”
Brad Polumbo, Newsweek

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