Canceling student loans could be the Biden presidency’s biggest mistake.
Here’s what you need to know — and what it means for your student loans.
President Joe Biden has a historic choice before him in an incredibly important election year. Biden can enact large-scale student loan forgiveness for millions of student borrowers. Or it can forgo broad student loan relief and focus on targeted student loan forgiveness. Either way, the president could be making the biggest mistake of his presidency. Let’s explore.
Student Loan Repayment: A Major Decision
Canceling the student loan is a major move for Biden as Democrats face an uphill battle to retain control of Congress in the November 8, 2022 midterm elections. One mistake, and voters could either choose to don’t vote, or vote for Republicans. Proponents of student loan forgiveness want Biden to forgive student loans for several reasons:
- Stimulate the economy;
- reducing disparities and inequalities; and
- give student borrowers a chance to achieve the American Dream so they can afford to get married, start a family, save for retirement or start a business.
If Biden proceeds with large-scale student loan cancellation, Biden will inevitably make at least some student borrowers unhappy. For instance:
- Amount of student loan forgiveness: If Biden cancels $10,000 in student loans, some borrowers will say he should have canceled $50,000 in student loans or even all of the student loan debt.
- Who is eligible for student loan forgiveness: Or, if Biden imposes income limits on those eligible for student loan forgiveness, some student borrowers will argue that everyone should be eligible for student loan forgiveness.
Some borrowers will be happy to get student loan relief. Others will say that Biden should have canceled more student debt. Biden favored $10,000 in student loan forgiveness, even though the White House denied a report that Biden made a final decision. The Biden administration has also proposed a possible income cap of $125,000 or $150,000 to qualify for student loan forgiveness. Biden also ruled out $50,000 in student loan forgiveness. However, renewed pressure to forgive $50,000 in student loans could persuade Biden to reconsider. Some student borrowers will consider an income cap reasonable, while others will say that high-income earners also struggle financially.
Cancellation of student loans: If Biden is focused on targeted student loan relief
If Biden chooses to focus on targeted student loan relief, he will gain and lose supporters. Biden canceled $25 billion in student loans and he made major changes to student loan cancellation. It focused on targeted student loan relief for specific student borrowers such as public servants, borrowers with disabilities, and borrowers who were misled by their college or university. For example, a report released this week shows that 9 million student borrowers are now eligible for student loan forgiveness. If Biden doesn’t enact large-scale student loan cancellation, here’s what could happen:
- Intra-party battles: progressive Democrats will continue to criticize Biden until the midterm elections.
- Alienation of progressive voters: Rep. Alexandria Ocasio-Cortez (D-NY) says that if Biden fails to cancel student loans, it will ensure Democrats lose control of Congress and alienate young voters.
- Earn freelancers: Independent and moderate voters generally oppose broad student loan forgiveness. If Biden chooses against a large student loan forgiveness, he could rally those voters to help Democrats keep control of Congress.
Republicans in Congress have previously criticized the president for even considering executive action to cancel student loans. They argue:
Student loans: next steps
For some, large-scale student loan forgiveness is an easy choice with a clear yes or no answer. For others, it is more complex and has multiple political and policy implications. Whichever path Biden takes, he will win and lose supporters. One thing Democrats and Republicans can agree on is this: Large-scale student loan forgiveness may benefit some student borrowers, but it won’t solve the underlying problem that college is unaffordable. for most Americans. Biden must also address the end of temporary student loan relief, which ends August 31. If you don’t have a strategy for student loan repayment once student loan repayments start up again, you need one. Here are some of the best ways to pay off student loans faster and save money: