The White House is also weighing how much student debt each borrower wants to eliminate. Biden told reporters this week that the amount would be less than $50,000 per person. Administration officials have also hinted that the White House will cut at least $10,000 for each eligible borrower, backing a position Biden himself appeared to support during a private meeting with the Congressional Hispanic Caucus, people familiar with the matter said. The government has also discussed limiting forgiveness for undergraduate loans, excluding those taking out loans for professional degrees in fields such as law and medicine, the people said.
“There are different proposals around the government on how to structure this,” said one person involved in the discussions, who requested anonymity to reflect private conversations. “Especially over the course of the past week, the executive branch and congressional staff have focused conversations on debt cancellation—how best to meet the president’s desire to ensure that the most economically vulnerable people with student debt are free from benefit from any action.”
Washington post first report This week, Biden said at a recent meeting of Hispanic lawmakers that he plans to take major action on student debt relief. On Thursday, the president publicly confirmed that he is “taking a serious look” at the matter and expects to make a decision “in the next few weeks.”The administration has extended the Trump administration’s moratorium on loan repayments, initially by coronavirus Pandemic until August 31st.
Biden’s recent remarks have sparked a major debate over whether canceling student debt actually benefits borrowers in need, or primarily helps wealthier college graduates who opt for hefty loans. White House officials are considering increasing income limits to preempt arguments made by Republicans — but also endorsed by centrist Democrats — that debt relief would reward high-income college graduates who don’t need federal aid.
A White House spokesman declined to comment on internal discussions, but said in a statement that the administration was evaluating options to provide relief, noting that the president supports legislation to cut $10,000 in student debt. The government also took action, disbursing more than $17 billion in loans to more than 700,000 borrowers, the spokesman said. The continued suspension of interest and payments on student loans has saved 41 million student borrowers tens of billions of dollars, the spokesman said.
But the loan forgiveness under consideration would go even further. According to Matt Bruenig, founder of the People’s Policy Project, in 2019, the most recent year for which data is available, 97 percent of student debt was driven by incomes below $150,000 per bill and per couple Holders of the $300,000 threshold. Left-leaning think tank. It would cost about $245 billion to cancel $10,000 in debt for each student borrower, according to the nonprofit Council for the Responsible Federal Budget, which advocates for curbing federal debt. The average 2020 loan for college graduates who paid for their degree with a loan was $28,400, According to the College Board54% of borrowers owe less than $20,000, while 10% owe at least $80,000.
Even a sharp increase in income cuts is unlikely to quell criticism of student loan forgiveness. Student debt is largely held by Americans with above-average incomes, with the poorest 20% of Americans holding just 8% of total student debt, as measured by income, according to the People’s Policy Project. 2019, 44% of adults earning less than the median income of $47,500 have no education beyond high school, compared with only 19% of those earning above the median. Conservative economists and Republicans have spent a week mocking the idea of Biden forgiving college loans.
“That’s the foundation of the Democratic Party — high-income, upwardly mobile urban professionals. Funding college graduates with usually expensive graduate degrees really offends those who didn’t go to college, and those who paid off their student loans. ,” said Brian Riedl, a conservative policy analyst at the Manhattan Institute. think tank. “It’s a slap in the face.”
But Biden is under intense pressure to take substantial action, especially as other White House economic agendas aimed at lowering health care, housing and other household costs collapse. The Congressional Hispanic Caucus and the Congressional Black Caucus are among those pushing for aggressive government action, in part because of the disproportionate share of black Americans among student debtors. Blacks make up 16 percent of the U.S. population but owe 23 percent of the nation’s student debt.
Rep. Alexandria Ocasio-Cortez (DN.Y.), who has been pushing the White House for student debt forgiveness, said the administration should cancel debts of up to $50,000 per borrower, expressing concern that $10,000 would not be worthwhile for many. improvement in meaning. people. For Americans with $30,000 or more in debt, eliminating $10,000 of that won’t significantly affect their monthly payment obligations, she said, a difficulty compounded by falling inflation-adjusted wages for millions of workers .
While, like college graduates, the average income of student debtors is higher than the overall income of Americans, those who owe student loans are far less affluent than most college graduates. According to the People’s Policy Project, more than half of student debt is held by people with essentially no wealth. The richest 20% of the population owe only a fraction of the student debt.
“I don’t believe in shutdowns, especially for so many front-line workers who are stuck in debt and may be left out of relief,” Ocasio-Cortez said. She added that the national income threshold doesn’t say anything about life in some parts of the country The cost is much higher. “The cancellation of $50,000 in debt is where the real reduction in inequality and the racial wealth gap is. $10,000 is not.”
Larry Summers, an economist who served under Presidents Bill Clinton and Barack Obama, said he would prefer Biden to approve policies that target the half of the population who have not gone to college, who, in general, have more money than those Few people went to university. He also said there were “concerns” that canceling student debt could increase inflation, depending on the total amount of loans forgiven.
Still, Summers stressed that the government’s current policy — a moratorium on loan repayments — is less targeted than a policy of debt reduction for specific groups of people.
“I’d rather prioritize people who didn’t go to college than those who did. Period,” Summers said. “But it’s better to do a limited, targeted program than a blanket relief.”