Biden’s 3 picks on student loans

Before abortion rights grabbed national attention this week, student loans and competing proposals on how to handle the nearly $1.7 trillion in debt owed by more than 40 million Americans were at the top of the White House agenda. President Joe Biden appears to be preparing for a plan to cancel at least some debt before the current pause on loan repayments expires in September – just weeks before the midterm elections.

Biden has never been a big fan of using the presidency to write off debt, but after Meet with members of the Congressional Hispanic Caucus last week and facing plummeting approval ratings in an election year, reports suggest this action happens. His press officer and leader both said they would announce a plan or extend the current payment pause again to give them more time to make a decision.

Biden has already extended the pause four times (former President Donald Trump issued the first pause, then extended it twice), worth around $200 billion. savings value, but pressure from liberal activists and Democratic lawmakers is mounting. Student loan experts told Vox that it’s important to use two frameworks to understand what kind of debt relief is coming: the amount of money that would be forgiven and who gets that forgiveness.

Progressives want Biden to go big, pushing for the most forgiveness with the lightest eligibility requirements. They say the stakes are high for Biden and his party, given the high likelihood that Democrats will lose control of Congress after this year’s election – in part due to low Democratic voter turnout in the mid-term elections. tenure and the lackluster enthusiasm of activist-minded young voters and other grassroots members of the party.

The first scenario: Biden forgives up to $10,000 in student loans

That seems like a likely option. During the 2020 Democratic primaries, Biden said he supported congressional action to eliminate up to $10,000 in student loans, while his leftist rivals argued for more ambitious proposals. Reports suggest He has since become more willing to use executive action to cancel federal loans, but he doesn’t seem likely to implement that option without strings attached.

“[T]The goal, it’s true, is to make sure it targets the people who need help the most,” White House press secretary Jen Psaki said last week. Administration officials have debated these eligibility requirements, which could include a limit based on income using tax returns or pay stubs (likely a $125,000 income limit), whether the institution attended by the borrower was a public or private school, the type of loan taken out and whether the loan was used for undergraduate or graduate studies.

The move would certainly bring relief, by canceling the debt of around 32% of borrowers, or about 13 million people, according to a analysis prepared for Sen. Elizabeth Warren (D-MA) by scholars at the Roosevelt Institute, a progressive think tank. Two million black borrowers would have their debt erased, and among borrowers who now owe more than they did when they took out a loan, this level of relief would reduce the debt of 14% of those borrowers to zero.

But the average student debt Americans hold is around $30,000, meaning the vast majority of debt holders would still be responsible for the payments. Any amount of forgiveness is unpopular with conservative figures, and progressives like Rep. Alexandria Ocasio-Cortez (D-NY) argue the number wouldn’t make a meaningful difference to many people. And the $10,000 figure would cost about $373 billion to deploy – about as much as the amount the federal government has spent on social assistance (the temporary assistance program for needy families) in the past 20 years.

However, this movement has a wide Supportincluding among young peopleand if canceling any amount of student debt contributes to inflation, this option inflicts the least damage.

The second scenario: Biden cancels between $10,000 and $50,000 in student loans

This option seems a little less likely, but not out of the question. Biden said he’s looking at less than $50,000 in pardons per person, about what Warren and Senate Majority Leader Chuck Schumer (D-NY) have required.

Biden probably wouldn’t hit the maximum amount here and would likely stick to the $125,000 income cap, the experts told me. But any additional $10,000 in relief over the first $10,000 would make huge differences for less well-off borrowers, according to the Roosevelt authors: “Every dollar of student debt cancellation counts, but bigger is bigger.” , the better to advance racial equity and economic security.” Charlie Eaton, assistant professor at UC Merced, and four other researchers write.

With $20,000 of relief, the student loan debt of half the borrowers, or about 20 million people, would be erased. Each additional increase of $10,000 results in a further increase of nearly 10% in the number of debt-free borrowers. But that total figure of $50,000 would cost around $1 trillion – more than has been spent on Pell grants or housing assistance since 2000 – and yet has come down. broad support among Democrats, Independents and young people. It would also be likely to get worse inflation slightly, but not as much as full debt cancellation.

The third scenario: Biden cancels all student loan debt for everyone, or for borrowers with more than $50,000 in debt

This option has an extremely low chance of happening, not only because Biden has said more than $50,000 of relief is off the table. The total price of $1.7 trillion would be more than the federal government has spent on earned income tax credit or unemployment insurance since 2000, and would increase the rate of inflation by 0.1 to 0.5 percentage points over a 12-month period, according to fiscal conservatives Committee for a Responsible Federal Budget. Universal debt cancellation would also disproportionate advantage many of the wealthiest Americans, since more than half of the outstanding debt is owed by people graduate degrees.

Yet progressives are pushing this option the hardest, and groups like the Student Debt Crisis Center are calling for the suspension of all eligibility requirements or applications. Herein lies a tension: targeting relief goes a long way to ensuring that low-income borrowers receive the bulk of the aid, but the Ministry of Education cannot afford to implement implements a massive screening effort to review applications. Right now, the Department is already struggling to implement smaller, targeted relief efforts that the Biden administration has already rolled out, according to Adam Minsky, an independent student debt attorney.

“Even though it’s wide enough [requirements], there are a lot of legitimate concerns that some kind of means test or other mechanisms to limit eligibility could be a huge problem administratively,” he said. “The Ministry of Education is already strapped to quickly implement all of these changes, and you are going to add something else on top of that that could potentially impact millions and millions of borrowers.”

Inaction seems unlikely, but each of these measures is a political gamble. Although a kind of relief polls well, it is not the main concern of most voters. As Atlantic’s David Frum wrotecanceling student loans carries the risk of being viewed as ‘a tax on voters the Democratic Party desperately needs to win back’, non-educated and working-class Americans, while slowing down anti-education efforts inflation and leaving only some of the most progressive members of his party happy.

Whichever path you choose, Natalia Abrams, president of the Student Debt Crisis Center, told me that progressives will have won at least one battle. The president’s legal authority to cancel student debt is an open question, but “if that happens, President Biden will agree that the president and the Department of Education have the authority to cancel student debt,” said Abram. “We can keep pushing for more. We can agree that it is leverage and if they can cancel $10,000, they can cancel $50,000. And then they can cancel everything.

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