What better way to connect with the average working American than asking them to flip the bill for someone’s overpriced degree in advanced basket weaving?
Biden’s new student loan forgiveness plan will take effect very soon offering $10,000 of debt cancelation for most borrowers and up to $20,000 for borrowers who received a Pell Grant as part of their financial aid package back in the day. These figures only apply to individuals making up to $125,000 per year and couples making up to $250,000. If you exceed those income thresholds, you’re out of luck on the Biden plan.
Needless to say, many borrowers who took out loans years and years ago are now rushing to figure out if they ever received a Pell Grant. The website to check your Pell Grant status is unresponsive and will be unusable for some time. As a side note, Biden also extended the student loan payment pause all the way through December.
As we noted this week, a good majority of Americans fear that Biden’s student loan plan will exacerbate the inflation problem plaguing households nationwide. As for the political ramifications, most Democrats are praising the plan but the criticism is a bipartisan effort:
Biden supporters hailed his decision to cancel $10,000 in debt for those making less than $125,000 a year as another bold bid to improve the lives of middle class Americans, following efforts to fight child poverty and to lower the cost of prescription drugs for seniors. Progressives welcomed the move but wanted more, underscoring the uneasy alliance between the White House and the left that has characterized this presidency.
Some economists, meanwhile, even those who have worked in Democratic administrations, argued that canceling student debt could further spike inflation and inflate the national debt. And some education experts pointed out that while it may ease the pain of some debtors, Biden’s effort does little to fix the fundamental problem — the high cost of college that prices many Americans out or leaves them laden with loans.
Across the aisle, Republicans who are looking to flip the House and Senate in the fall saw a political opening in making an argument about fairness — that poorer tax-payers who didn’t go to college and thus racked up no education debt essentially will end up subsidizing those who did and stand to earn more over their lifetimes.
Biden sort of hemmed himself into doing something on student loans since he basically promised it as part of his campaign platform in 2020. Progressives are demanding big, bold moves like canceling all student loan debt, no questions asked. Biden typically promised something like maybe $10,000 which is basically what he delivered with the exception of up to $20,000 for Pell Grant recipients.
Some Democrats, such as Ohio Senate candidate Tim Ryan, pointed out the obvious problem with taxpayers suddenty taking on hundreds of billions in new debt and the unfairness it creates in the system:
U.S. Rep. Tim Ryan on Wednesday criticized President Joe Biden’s plan to forgive up to $20,000 in student debt for certain borrowers, arguing it sends the “wrong message” to Ohioans without a degree who are trying to make ends meet.
Ryan said he’s paying off his own family’s student loans and believes higher education is too expensive. But he argued the government should prioritize other policies over broad forgiveness, such as tax cuts, medical debt cancellation and targeted forgiveness for essential workers.
“While there’s no doubt that a college education should be about opening opportunities, waiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet,” he said.
There are millions of taxpayers who never spent a dime on college and haven’t taken a dime in student loan debt. Why do they get to foot the bill for others who went too far in debt?
It’s basically a bailout for irresponsible behavior on steroids. That’s not to say everyone who took on student loan debt is irresponsible but the move by Biden to simply sweep it under the rug and let millions of borrowers avoid responsibility reeks of unfairness to millions of people who paid their loans off or have been paying faithfully along never expecting a handout.
The goal of the plan is about incentivizing millennials to come out and vote in November. They’re the generation currently in the midst of repayment from loans taken out in the 2000s and 2010s.
Some of the other Democrat criticism of the plan has dealt with the way it was enacted by sidestepping Congress, a valid argument but a “safe” position to play by not attacking Biden but simply grumbling about the way things work in DC:
First elected Democrat I’ve seen panning Biden’s student debt relief plan: Rep. Chris Pappas, facing a tough reelect in New Hampshire.
“This announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities.’ pic.twitter.com/rcEf5SPvl0
— Kevin Robillard ?? (@Robillard) August 24, 2022
Amid the criticism, millions of borrowers will no doubt be ecstatic that their student loan debt could be wiped out entirely. Well, not “wiped out,” exactly, but transferred to someone else’s responsibility, namely U.S. taxpayers.
Some borrowers could end up turning out to vote for Democrats as a “thank you” to Biden for taking action on an issue he pledged to address.
On the other hand, the move simply reinforces Democrats as the party that stands on the side of protecting overpriced universities and rewarding many graduates who make well north of $100k by wiping out their debt.
This exchange between an Iowa voter and Sen. Elizabeth Warren from back in 2020 encapsulates the fairness argument perfectly:
"I've saved all my money. [My daughter] doesn't have any student loans. Am I going to get my money back?"
Elizabeth Warren: "Of course not."
“I worked a double shift…you’re laughing at me…we did the right thing and we get screwed.”pic.twitter.com/xGWKOZi9av
— RNC Research (@RNCResearch) August 24, 2022
“We did the right thing, and you’re laughing at me.”
The results are unpredictable and the plan might actually backfire in November.
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