Student loan borrowers and Sen. Elizabeth Warren are thrilled.
“President Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity,” said the White House in a statement on August 24. “During the campaign, he promised to provide student debt relief.”
“Today, the Biden Administration is following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic,” continued the statement.
Like everything in our hyper-partisan political environment, the news this week that U.S. President Joe Biden has made good on his campaign promise to wipe out student loan debt didn’t please everyone.
In fact, it hardly seemed to please anyone, at least at first. Plenty of progressive news outlets have lambasted the plan as failing to go far enough. On the other side of the aisle, it is being criticized as going too far during a time the government can ill-afford to be printing any more money.
“On Wednesday, August 24, millions of debtors received the news they’d been waiting to hear,” began Jones. “President Biden will forgive some federally held student-loan debt, the White House announced.”
“Pell Grant recipients making less than $125,000 per year individually or $250,000 jointly qualify for $20,000 in debt relief. Those who did not receive Pell Grants but meet the income requirements are eligible for $10,000 in relief. The Biden Administration will extend a pause on student-loan repayment for a final time to December 31, 2022, and, in a major move, cap income-based repayments for undergraduate loans at 5 percent of a person’s monthly income. For those on income-based repayment plans, the government will cover their unpaid monthly interest as long as they make their monthly payment.”
“Why Cancelling Student Debt Will Pay Dividends for All,” explained Joseph Stiglitz for the Atlantic, before going a step further: “Actually, Cancelling Student Debt Will Cut Inflation.”
“We want to fight inflation and we want to keep the labor market strong,” wrote Stiglitz. “One of the most important ways to achieve both goals is to forgive a portion of student-loan debt.”
“Whatever your view of student-debt cancellation, the inflation argument is a red herring and should not influence policy,” asserted Stiglitz. “Taking that logic to the extreme, canceling food stamps would do far more to reduce inflation- but that would be cruel and inhumane, and fortunately, no one has suggested doing so.”
“A closer look at the student-debt-cancellation program suggests that the new student-loan policy may even reduce inflation; at most, its inflationary impact will be minuscule, and the long-term benefits to the economy are likely to be significant.”
“Student Loan ‘Fixes’ Go Beyond Forgiving Debt,” agreed the Chicago Sun-Times wholeheartedly.
But not every Democrat was on board.
“The centrist revolt against Biden’s student debt plan,” is how Ryan Lizza and Eugene Daniels characterized the lay of the land in Washington this week.
“That was fast,” the authors complained: “Democratic moderates and progressives spent a year-and-a-half feuding over the Biden agenda. The Inflation Reduction Act finally brought them together. But President JOE BIDEN’s long-awaited plan to cancel some student debt, one of the most contentious issues dividing Democrats, has reignited the intra-party policy wars.”
“Biden’s announcement yesterday was an enormous achievement for the left,” concluded Politico, boldly. “But they didn’t change everyone’s minds.”
In conservative media circles, the student loan debt forgiveness plan was panned as a, “Five-Figure Handout to the Educated,” and worse, “Biden’s Illegal, Inflationary, Inequitable Attempt to Buy Votes.”
“Biden’s Student Loan ‘Forgiveness’ Sticks It to the Little Guy,” complained Erielle Davidson for the New York Post, while Phillip Wegmann cynically pointed out for Real Clear Politics: “Student Loan Amnesty a Windfall for DC Staffers.”
While the White House has been reluctant to commit to a price tag for the student loan debt forgiveness program, Biden’s order has been projected to cost an estimated $300 billion according to the Wharton School of Business at the University of Pennsylvania.
“What the data shows us is that, because of student loan debt, there are many people who don’t move out of the mama’s basement, who can’t save up money to buy a home, who don’t start small businesses, who don’t start a family,” said Democratic Senator Elizabeth Warren recently.
“You relieve the debt burden some for those people, and we have more economic activity,” Warren continued. “In other words, cancelling student-loan debt is good for the people whose debt is cancelled, but it is also good for our economy and the rest of America.”
“This has become part of our country now,” Sen. Warren lamented. “People for whom their only sin was to want to try to get an education and not be in a family that couldn’t afford to write a check for it. As a nation, we can do better.”
Sen. Elizabeth Warren has been championing student-loan debt forgiveness for almost a decade. She sat down with NPR’s Rachel Martin on August 25 to discuss Biden’s plan and what it means for millions of borrowers.
“I’m celebrating,” Sen. Warren said frankly. “Look; in the last 24 hours, 20 million Americans learned that they never have to pay another nickel of student loan debt, and 23 million more Americans learned that the amount they owed on their student loans when COVID hit is now substantially reduced.”
“In addition to that, all the parents of high schoolers and people who will be going to school in the future learned that the income-determined repayment plan has changed so that anyone who wants to go to school and isn’t in a family that can write a check for that will not have to go through debt hell,” Warren pointed out. “And that just means life got better for a whole lot of folks in America’s middle class. So yay.”
“Would I like more?” Warren mused. “You bet I would. Will I keep fighting for it? Of course. But this is huge.”
(contributing writer, Brooke Bell)