The Day – The White House in an indulgent mood? At least $10,000 in student loans could be wiped out
WASHINGTON — The White House is considering canceling at least $10,000 in student loans per borrower through executive action, people familiar with the matter say, with momentum building as President Joe Biden seeks ways to boost voter enthusiasm ahead of November’s midterm elections.
The move would involve considerable risk. Some deficit hawks fear it will worsen inflation that is already weighing heavily on Democrats’ chances of retaining control of the House and Senate. But any move may not go far enough to appease progressives and other advocates.
The administration has yet to finalize the outlines of the proposal, but aims for the relief to be targeted to low- and middle-income people, according to people familiar with the internal discussions. Biden himself confirmed on Thursday that he plans to do something about it, but said he doesn’t weigh $50,000 in forgiveness per borrower.
That figure has been put forward by House Progressives and Democratic Senator Elizabeth Warren, as well as several advocacy and civil rights groups. Warren’s former top aides, including Julie Margetta Morgan and Bharat Ramamurti, now hold senior positions in the Biden administration, working on the issue at the Department of Education and the National Economic Council.
The president offered to waive $10,000 per borrower during the presidential campaign, but his White House was slow to deliver on his promise. He extended a temporary freeze on student debt payments that was enacted in the early days of the pandemic, a move that allowed him to kick the road on the issue.
When debt payments were frozen in 2020, it was part of a broader effort to support demand in the pandemic slump. That logic no longer applies now, with the Federal Reserve battling runaway inflation and trying to rein in spending, not stimulate it.
Aides say the president had hoped Congress would take legislative action and his team was split on the merits of a broad student debt forgiveness.
The White House is looking for ways to excite progressives and other crucial voter groups ahead of the midterm elections, where lackluster polls for Democrats show the party faces an uphill battle against an overfed Republican base .
Canceling student debt polls very well among voters under 45, especially young men who may have borrowed money for a community or technical college, said Celinda Lake, president of Lake Research Partners, a firm that works with Democratic candidates and interest groups and advised Biden’s presidential campaign. A Morning Consult/Politico poll from early April showed that 47% of respondents rated student debt relief as a major or very important issue.
A $10,000 forgiveness per borrower — the floor of what Biden is considering — would pay off loans for 15 million out of 46 million borrowers.
Such a move could have a particular impact on black Americans, who are disproportionately affected by student loan debt. Statistics from the Education Data Initiative show that the average black college graduate owes $25,000 more than their white peers.
Nearly half of black students owe an average of 12.5% more than they borrowed in just four years out of college. During the same period, 83% of white graduates owe 12% less than they borrowed. More than half of black student borrowers say their net worth is less than their student debt balance.
“President Biden, we agree that we should not forgive $50,000 in student loan debt. We should call it all off. $50,000 was just the bottom line. For the black community, which has racked up debt over generations of oppression, anything less is unacceptable,” the NAACP’s Wisdom Cole said in a statement.
Asked if she would support Biden’s write-off of just $10,000 per indebted borrower, Warren told reporters Thursday that she would “not be negotiating against” herself.
“We chose the $50,000 figure because it does the most to close the racial wealth gap, the gender wealth gap and promote equal opportunity across the country,” Warren said Thursday. .
Progressives spent Thursday praising Biden for striking up a conversation.
Rep. Mondaire Jones, a progressive Democrat from New York, said if he thought Biden should cancel more, “even $10,000 would be transformative for millions of Americans.”
Moderate Democratic Sen. Joe Manchin told reporters on Wednesday that something needed to be done to provide student debt relief, but he’s worried about “cancelling it completely.”
Republicans argue that canceling student debt is costing the government too much and would increase inflation. GOP Sense. John Thune, Richard Barr, Mike Braun, Bill Cassidy and Roger Marshall introduced a bill that would prohibit the president from writing off outstanding federal student loan debt due to a national emergency.
“After a huge increase in our national debt, thanks to the pandemic and reckless Democratic spending, the government doesn’t need to give up billions of dollars in providing student loan relief to Americans,” Thune said Wednesday.
A White House spokesperson said the administration’s actions so far on student debt have resulted in the approval of more than $17 billion in waivers to more than 700,000 borrowers, as well that additional tens of billions saved by the 41 million borrowers who benefited from the extended student loan payment break.