President Joe Biden looks, once again, ready to announce a student loan forgiveness plan. Legacy media outlets the administration seemingly favors with leaks have published stories predicting the announcement will come Wednesday, Aug. 24. The plan is expected to extinguish perhaps $10,000 per borrower, with an income cap for beneficiaries. It promises to be too stingy for progressives and too generous for conservatives.
The move follows a loan payment pause to assist student debtors during the COVID era. President Donald Trump signed the CARES Act in March 2020 at the pandemic’s start. Passed by a nearly unanimous 116th Congress, the legislation enacted a six-month suspension of payments and interest accrual on federal student loans. It also suspended garnishments and tax-refund interceptions on those accounts. The suspensions continued, by presidents Trump and Biden, six more times until the current one, good until Aug. 31.
Student Loan Forgiveness for Some
Reports indicated only those who make less than $125K per year are eligible for the forgiveness plan. How much will they get? That’s a bit murkier. Some news outlets, like Reuters, suggest $10K is the top limit, with payments “as much as $10,000.” Others, including The Hill, say the figure will be “at least” that much. A $10K limit will cause anger and disappointment among progressives while activating staunch resistance from conservatives.
Senator Bernie Sanders (I-VT) was quick to criticize news of the announcement, tweeting:
“The average amount of debt forgiveness to businesses receiving PPP [Paycheck Protection Program] loans: $95,700. If we could afford to cancel hundreds of billions in PPP loans to business owners in their time of need, please do not tell me we can’t afford to cancel all student debt for 45 million Americans.”
Meanwhile, Charles C.W. Cooke of the National Review shredded the news:
“If this is true, it would represent a giant middle finger to America. It would represent a middle finger to the Constitution, which vests legislative power in Congress, not the president. It would represent a middle finger to Congress, which has not given the executive branch the authority to give $10,000 each to millions of college students. It would represent a middle finger to the Department of Education, which found last year that it ‘does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances.’”
Writing about the loan program authorization, Cooke said Congress “authorized a loan program, not a system of politically motivated rolling jubilees.”
Secretary of Education Miguel Cardona was trotted out on the Sunday talk shows to put a positive spin on things. Chuck Todd on NBC’s Meet the Press asked him if the seventh extension of loan terms was coming or would there be a “permanent fix”? Cardona’s reply had one substantive detail – that Americans would get some answer regarding the future of loan terms “within a week or so.” When pressed by Todd to agree that, “It won’t be nothing – is it fair to say it won’t be nothing?” Cardona declined.
A poll of Americans published by CNBC/Momentive on Aug. 22 noted that “34% say loans should be forgiven for those in need, 32% say all student loans should be forgiven, and 30% say no student loans should be forgiven for anyone.” According to a study by New York Federal Reserve economists, forgiving $10,000 per student would amount to $321 billion of federal student loans and eliminate the entire balance for 11.8 million, or 31%, of borrowers. Per Liberty Nation’s Economics Correspondent Andrew Moran, that’s on top of the $102 billion the pause in collections has already cost Americans.