The Biden Administration and student loan forgiveness advocates have gone back and forth over the last year on whether federal student loans should be forgiven and, if so, up to how much. As previously reported by Liberty Nation, for the Democrats, debt forgiveness was a “break glass in case of an emergency” policy, and based on this move, the party is panicking. Three people with insider White House knowledge claim officials plan to cancel $10,000 in debt per borrower. However, the logistics of distributing the relief are still up in the air.
Despite this being a massive move for the president, following through on a campaign promise, some on the left aren’t all that pleased. Derrick Johnson, president and CEO of the NAACP, tweeted in response to the leak, “@POTUS canceling $10,000 in student loan debt is like pouring a bucket of ice water on a forest fire,” stating that it’s simply not enough.
The 10k also comes with a caveat. The magic wand will only be waved at individuals making below $150,000 and married couples making less than $300,000. Thomas Gokey, the co-founder of the Debt Collective, a national union of debtors, says the income cap is just another “hoop” borrowers will have to jump through, complicating the cancellation process. He points out that all other “forgiveness programs,” such as the public service forgiveness program and income-driven repayment plan, have been nothing but failures and deliver relief to a very small population. Yet, 97% of all debt is held by those making less than the cap. Gokey also has a problem with the amount, labeling Biden’s offer as “an absolute insult.”
Due to the tragedy in Texas, Mr. Biden decided to delay the announcement, which was due for the University of Delaware commencement over Memorial Day weekend. The postponement could allow advocates the opportunity to convince Biden to up the amount, but it likely won’t be much more, if at all. The president has been adamant that he doesn’t think he has the authority to write off 50k with an executive order. However, to make a meaningful impact on the $1.6 trillion in outstanding debt hanging over Americans’ heads, activists, such as Senator Elizabeth Warren (D-MA), argue that $50,000 is the lowest Biden can go.
Canceling this amount per borrowing will cost the government about $321 billion and completely take the weight off the shoulders of one-third of borrowers. The average debt balance is $30,000 and a whopping 3 million people owe more than $100,000.
Although the final announcement may be coming in the summer of 2022, it will take a while until the plan is implemented. The income cap will be an issue. The Treasury and Education departments cannot exchange tax information, so determining who qualifies will have to be decided another way. Depending on tax records would also exclude millions of lower-income borrowers who don’t file taxes. There are problems whatever avenue the government takes, whether it be self-attestation or debtors applying. Therefore, the implementation of the legislation could take at least two years, affecting its impact. It’s not 100% clear whether the action will come in the form of an executive order, but if it does, the 2024 Democrat presidential candidate could use it to their advantage. To keep the order from getting revoked by a Republican President in two years, Democrats will need their voters at the polls.
Source of The Problem
Some argue forgiveness should only go towards an undergraduate degree, while others speculate this is a racial issue. Wisdom Cole, the NAACP’s youth and college division director, believes it is. He says, “The Black community continues to be shackled by student debt, and the $10,000 in cancellation will not break the chains.” Advocates argue if Biden is a faithful ally to the black community and wants to support them, he’ll need to do more.
The ACLU argues that the debt disproportionately affects black and brown families, especially black women. The higher education system is supposed to offer financial stability and mobility, yet loans keep borrowers from stimulating the economy. To combat the alleged systematic racial issues embedded in the higher education system, the ACLU wants the Biden-Harris administration to cancel $50,000 per borrower. However, shouldn’t the government instead focus on the cause of this issue, not its effects? Every year, every university across the United States increases its tuition by a few thousand dollars. By the end of your four-year undergraduate stint, you’re most likely paying way more tuition than you did as a freshman.
From 2002 to 2022, the average tuition and fees at private national universities increased by 144%. Out-of-state tuition and fees at public national universities rose 171%, and in-state jumped 211%. By 2042, how much will it cost to obtain an undergraduate degree? Perhaps the administration and Congress should focus more on combatting and controlling the rising cost of education rather than attempting to dent the $1.61 trillion federal outstanding debt. If President Biden waves the wand now, his future Democrat counterparts will be expected to do the same over and over as the debt grows and more Americans borrow.