Democrats Turn On Biden's Student Loan Handout
Debt relief for those who need it the least
The American Action Network, a conservative advocacy organization with ties to House GOP leadership, is going up with a national ad campaign for the next 10 days arguing President Biden's student debt forgiveness plan is unfair to working-class Americans.
Republicans are confident that the president's plan will be politically problematic, and are backing up their spin with paid advertising.
The ad, which will be airing during upcoming college football and Major League Baseball games, features a waitress, mechanic and landscaper talking about working extra shifts to help theatre majors and business majors get out of debt.
A landscaper in the spot says: " Biden's right — you should take my tax dollars to pay off your debts. My family will figure out how to get by with less. What's most important is we spare college graduates from any extra stress." A mechanic follows up: "Wanna be a struggling artist? College is on me."
Republicans aren't the only critics. Within hours of the president's announcement Wednesday, several Democratic lawmakers in swing states and districts announced their opposition to Biden's student debt forgiveness plan.
One Democratic official told Axios: "This was our best political week in a year, and the Biden White House immediately stepped into it."
While the Democratic Party broadly cheered Mr. Biden’s announcement, some senators and House lawmakers in competitive races distanced themselves from the move. Sen. Catherine Cortez Masto (D., Nev.), said she disagreed with the action because it “doesn’t address the root problems that make college unaffordable.” Sen. Michael Bennet (D., Colo.) said the aid should have been more narrowly targeted and been paid for with new revenue.
Rep. Tim Ryan (D., Ohio), who is running for a seat in the red-leaning state vacated by retiring Republican Sen. Rob Portman, said “waiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet.”
Mr. Ryan has worked to appeal to working-class voters that his party has lost to Republicans in recent years. His GOP opponent, J.D. Vance, said Mr. Biden’s plan would “bail out the group of people least in need.”
After months of will-he-or-won’t-he suspense, President Biden has announced his executive actions on student debt. The administration plans to cancel up to $10,000 for borrowers currently earning up to $125,000 annually ($250,000 for married couples)—with the maximum forgiveness doubled for the students who, based on their parents’ finances, received Pell Grants when they attended college. Biden will also extend the pause on payments “for one final time” through the end of the year and allow those with undergraduate loans to cap their payments at 5 percent of their discretionary income, as opposed to 10 percent under current policy. Because the “cancellation” is really a transfer, the combined changes will cost taxpayers something like $500 billion—about $1,500 for every person in the United States.
Forgiving student debt may be a savvy way for Biden to appeal to young, left-leaning voters, but it’s indefensible as policy. Beyond the baseline question of whether the government should ever wipe out the willfully assumed debts of a preferred class of Americans at the expense of everyone else, the program is a poorly targeted use of taxpayer funds, rewards the dysfunctions of the higher-ed sector, and is likely illegal.
Yes, the limits placed on the program make it less of a bonanza for the upper-middle class than it could have been. The largest debt loads are typically held by those with advanced, not just undergraduate, degrees, so blanket forgiveness would have been a massive windfall for young lawyers. But the $125,000 income threshold doesn’t come close to targeting the most sympathetic cases: those who were preyed upon by low-quality colleges, often didn’t even earn a degree, and wound up working at the proverbial Starbucks. The median earnings for a U.S. female working full-time and year-round were about $50,000 in 2020; for a male, the number was roughly $60,000. Yet the White House set its cutoff for five-figure handouts at more than twice those amounts—and, citing numbers prepared by its own Department of Education, boasts that 87 percent of the debt relief announced yesterday will go to those earning less than $75,000 in individual income. Even that would be an odd threshold for taxpayer largesse, as it’s above the 2020 median household income and more than triple the 2022 Federal Poverty Level for a family of three. But rest assured: “only” about $65 billion will go to individuals earning even more than that by themselves, at a cost of $200 per U.S. resident.
Thanks to the income cap, this is not a handout to the rich—but it’s a handout to a lot of not particularly needy Americans: educated, young, with their peak earning years ahead, and oftentimes already well-off. Many of these individuals made deliberate, well-informed decisions to borrow money to attend college, and benefited from it.
Income levels aren’t the only measure by which the program doles out taxpayer funds irrationally. Those who didn’t attend college will still pay their taxes to support forgiveness for those who did. (Among Americans 25 and up, nearly four in ten have no college education.) Someone with business, mortgage, or car loans might carry just as much debt as a former college student and have taken it out for just as good a reason—but he will get no relief.
Keep reading with a 7-day free trial
Subscribe to The Transom to keep reading this post and get 7 days of free access to the full post archives.