With the November midterm elections looming and election night looking increasingly bad for Democrats, President Joe Biden is reportedly getting closer to a decision that could cancel roughly $10,000 worth of federal student loans per borrower.
Deputy Press Secretary Vedant Patel stated, “No decisions have been made yet — but as a reminder no one has been required to pay a single dime of student loans since the president took office.”
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According to The Hill, Biden is considering the $10,000 amount in cancellations.
The Washington Post reported that in the latest version of the plan, student loan forgiveness would be limited to those who earned less than $150,000 in the previous year, or less than $300,00 for married couples filing jointly.
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While Joe Biden and the Democrats may be looking at student debt cancellation as a great way to get votes in November, economists say the move would add to a soaring federal deficit and the highest inflation rate in 40 years.
Not to mention the obvious moral-hazard problems of another bailout, and the unfairness of putting that debt onto people who didn’t go to college or who paid off their loans like responsible adults.
Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget says,
“Student debt cancellation may be an extremely appealing political talking point, but it is not good policy. It is costly, inflationary, poorly targeted, and fails to address the root problems in our higher education financing system. Either the President is serious about reducing deficits and getting inflation under control, or he is not. The White House can’t have it both ways. We need to be focusing on a serious and effective agenda that prioritizes sound policies, not poorly targeted political giveaways.”
MacGuineas also points out what many Republicans have argued, that any sort of loan forgiveness would ultimately benefit wealthy Americans. She continued:
“Full debt cancellation would be a massive hand-out to rich doctors and lawyers, would worsen our inflation crisis, and would cost almost as much as the entire 2017 tax cuts. Even partial debt cancellation would be costly, regressive, and inflationary. Forgiving $10,000 per person of debt would cost as much as universal pre-K or a full extension of the expanded ACA subsidies.”
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Currently, by every indication, the midterm election will be a very good one for Republicans. This is making Democrats sweaty and looking for ways to get the attention of voters who are struggling with inflation and the high cost of gas and food. Many are blaming Biden and the Democrats.
Student loan forgiveness will get the attention of Democrat-leaning younger voters, especially ones with student debt. A recent Washington Post report says that Democrats in general favor student loan forgiveness.
In what WaPo describes as the “very liberal,” a.k.a. Progressive wing of the party, there is 93% support. Keeping the AOC’s of the party happy and dangling debt forgiveness in front of the base of the party to distract from the myriad of crises in the Biden administration could be common election year sense.
With bad election year predictions, Joe Biden may hold out until closer to November to make any sort of announcement.
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