White House plan would forgive student loan debt up to $10,000: report
The White House is considering a plan to forgive up to $10,000 in student loan debt per borrower in a bid to bolster support among young voters just months before millions of Americans head to the polls for mi -Fall mandates, according to a new report.
Debt cancellation, if passed, would give Democrats a chicken-in-all-pots-style appeal to voters as they head into an election that could see the party lose one or both majorities in Congress.
The Washington Post, citing three knowledgeable peoplereported that President Biden wanted to announce the rescission order as early as this weekend, when he was scheduled to deliver the commencement address at his alma mater, the University of Delaware.
However, that idea was scrapped after Tuesday’s mass shooting at Robb Elementary School in Uvalde, Texas, which killed 19 students and two teachers.
The plan – which has not been finalized – would limit loan forgiveness to Americans who earned less than $150,000 in the previous year. Married couples filing jointly would have had to earn less than $300,000 to qualify.
Both sides of the political divide have expressed frustration with the announced plan, with Republicans saying it would amount to a gift to wealthy parents who can afford to pay off their children’s debt – while shifting the burden onto taxpayers, including many have never attended college.
“Why should a waitress who didn’t go to college pay the student loan debt of a lawyer who earns $300,000?” Sen. Tom Cotton (R-Ark.) tweeted Friday. “That’s exactly what will happen under Biden’s student loan transfer plan.
“There is no ‘pardon’ student loan,” Cotton added. “There is only the transfer of debt from those who took out the loans (and benefited from them) to those who did not attend college or who repaid their debts responsibly.”
Republicans could also challenge any student loan executive order in court, claiming that only Congress has the power to authorize forgiveness through its scholarship power.
In contrast, Democrats, including Senate Majority Leader Chuck Schumer (D-NY) and Rep. Alexandria Ocasio-Cortez (D-NY), have urged Biden to write off student debt up to $50,000 per borrower. — an amount the White House balked at.
“$10,000 means the tested forgiveness is just enough to irritate people against it *and* the people who need forgiveness the most,” Ocasio-Cortez tweeted on Friday in response to the report. “$10,000 relieves the most those who owe the least. What relief for the most desperate? For them, the interest will cancel out that quick 10k. We can do better. »
The announced plan comes as the White House attempts to revive Biden’s faltering political fortunes, particularly among young people. A Quinnipiac University poll released last week found that 61% of Americans between the ages of 18 and 34 – the cohort most likely to have student loan debt — disapproved of the job the ruling president is doing, while only 27% approved.
Members of both parties have already identified student loan forgiveness as a potential issue in the fall election. Progressive Sen. Elizabeth Warren (D-Mass.) repeatedly implored Biden to cut debt during an appearance on CBS’ “Face the Nation” last month.
“We have millions of people across the country saying they’re not ready for the resumption of their student loan payments, that they just can’t handle the burden of those loans,” Warren said on April 24 “…As Democrats, we need to deliver. We need to attack the costs head-on and we have the power to do so. We have less than 200 days left [before the midterms]yet.”
Days later, Rep. Virginia Foxx (R-NC) and Sen. Richard Burr (R-NC), top House and Senate Education Committee GOPers, fired back by an op-ed published by Fox News which said that any cancellation of student loans would force Biden to “[place] politics and polls above his fiscal and moral responsibilities.
“Desperate times call for desperate measures,” Burr and Foxx wrote, “and Uncle Joe is banking on leftist ideologues to save the Democrats from a disastrous midterm election, taxpayers be damned.”
Former President Donald Trump initially suspended federal student loan repayments in March 2020 at the start of the COVID-19 pandemic. Last month, Biden extended the hiatus until August 31 – the third time he had done so since taking office – citing the ongoing outbreak and “the unprecedented economic disruption it has caused” .
“If loan repayments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student borrowers would face significant economic hardship, and delinquencies and loan defaults could threaten the financial stability of Americans,” he said at the time. .
Although the White House did not immediately respond to the Post’s request for comment, spokesman Vedant Patel told The Washington Post that “no decision has been made yet.”
Ultimately, canceling $10,000 of student loan debt per borrower could cost the government more than $200 billion, according to the Committee for a Responsible Federal Budget.
In March, before the final break, the nonpartisan think tank discouraged extending the moratorium further, writing, “It has already cost the federal government over $100 billion and it would cost another $50 billion a year to continue. . If the payment pause continues through the summer, it will have cost half as much as forgiving $10,000 per borrower. At the same time, it will worsen inflation.
FBRC President Maya MacGuineas told The Post on Friday that while the rumored cancellation “would be popular in the short term, especially among those receiving this unexpected windfall…it is completely at odds with the company’s own rhetoric. Biden on the importance of deficit reduction.”
“The cost of college is way too high,” she added, “but no serious policymaker would say that canceling student debt is the right solution.”