Once again, Joe Biden is going to extend the moratorium on seven million student loans, and many conservatives are asking if the president is just going to cancel the entire $1.6 trillion in student debt altogether.
The radical left has been pushing student loan debt cancellation since Joe Biden entered office, insisting the president can cancel the entire amount “with the stroke of a pen.”
But it was never going to be that easy.
Wisdom Cole, the N.A.A.C.P.’s national director of youth and college, told the New York Times that student loan debt is a “racial and economic justice issue that stains the soul of America.”
“With each and every repayment extension, you make a stronger case for canceling it,” Mr. Cole said. “At this point, just cancel it.”
Did you hear that, all of you former students? If you paid off your student loan debt or worked your way through college, you’re a miserable chump for doing things the right way.
“Joe Biden, right now, is the only president in history where no one’s paid on their student loans for the entirety of his presidency,” Ron Klain, Mr. Biden’s chief of staff, said last month on a “Pod Save America” podcast. “The question of whether or not there’s some executive action on student debt forgiveness, when the payments resume, is a decision we’re going to take before the payments resume.”
Such comments have left debt-cancellation advocates torn between optimism and frustration. “If they’re not going to do it, that gives false hope to borrowers,” said Natalia Abrams, the founder of the Student Debt Crisis Center, a nonprofit advocacy group.
The costs of forgiving $1.6 trillion on student loans are high. The moral hazard of taking on financial responsibility and reneging on that promise should not be lightly dismissed. Columnist Matthew Noyes took out $27,000 in college loans.
“Taking out a loan is a choice, and personal responsibility shouldn’t be supplanted by taxpayer bailouts. ‘Canceling’ student loans means penalizing people like me for honoring my word and repaying the debt I chose to accept.”
The Biden administration is planning on extending the moratorium until August 31. Would he dare force one of his key constituencies to start paying up right before they vote in the midterms?
“There’s obviously a huge amount of pressure, including from the Senate majority leader, to just cancel student loans,” Ms. Erickson said. “The payment pause has just become inextricably linked with the canceling student loan conversation and makes it all the more politically dicey for the administration.”
With inflation running at its fastest pace in 40 years, the extension could add fuel to the hot economy by keeping money in the hands of consumers who can spend it. That poses a further challenge, as strong consumer demand has collided with constrained supply chains, labor shortages and a limited supply of housing to push prices higher.
The other major objection to canceling student loan debt is that the act of debt cancelation would benefit only the richest Americans.
As journalist Emma Ayers adds, “Students from families earning more than $114,000 a year borrow at the same rate as the lowest-income students — and they take out loans nearly twice as large. Students with advanced degrees — lawyers, doctors and others — account for 40% of all student debt [according to estimates by American Progress]. And the top 25% of income-earning households hold almost half of student loan debt… Student forgiveness would largely be a hand up to the better off.”
Moreover, student loan debt forgiveness only benefits those who went to college.
“More than 90 percent of children from the highest-income families have attended college by age 22 versus 35 percent from the lowest-income families. Workers with bachelor’s degrees earn about $500,000 more over the course of their careers than individuals with high school diplomas That’s why about 34 percent of all student debt is owed by borrowers in the top quartile of the income distribution and only 12 percent owed by the bottom 25 percent. Indeed, the majority of all student debt is owed by borrowers with graduate degrees.”
There are certainly low and middle-income people who were snookered into taking out massive loans at exorbitant rates and should have that debt forgiven — especially if they attended some of the fly-by-night, for-profit schools that made exaggerated or false claims about job placement after graduation. But these are separate law enforcement issues and shouldn’t be piggybacked on top of student loan repaying issues.
Biden may not be able to hold off his radical base after August 31 and may be forced to cancel a lot of the $1.6 trillion in debt. If he does, he’ll have an argument from Republicans who may end up suing the administration in federal court to prevent it.