Joe Biden wants to tackle student debt. He didn’t exactly campaign on it, but it’s something the President-elect has indicated would be one of his main priorities early on in his administration. It would be a perfect way to help stimulate the economy, protect borrowers whose payments have been deferred since March, and deal with the country’s biggest debt bubble. Last week, New York Senator Chuck Schumer said Biden would explore eliminating up to $50,000 worth of debt from every student borrower. By early this week, however, it was clear even Schumer’s vision was pie-in-the-sky.
On Monday, President-elect Joe Biden affirmed his support for erasing some student debt "immediately."
The provision calls for the federal government to pay off up to $10,000 in private, nonfederal student loans for "economically distressed" borrowers.https://t.co/ttKSbM5pjG
— NPR (@NPR) November 18, 2020
Once again Democrats are negotiating against themselves. Biden could theoretically eliminate as much student debt as he chooses with an executive order. If he were to do so, he’d likely become one of the most popular presidents in American history overnight. But the compromise candidate seems hellbent on creating some sort of pseudo-compromised solution and pushing it through Congress. What started as a plea for widespread federal loan relief has been whittled down to the first $10,000 of only private loans for those who qualify as “economically distressed.” That’s effectively paying money directly back to private lenders, doing virtually nothing to alleviate the massive debt bubble, and hanging the 92 percent of student borrowers with federally-backed loans hanging out to dry. Biden’s taking a wide open layup and sailing it over the top of the backboard.
As David Dayen writes for The American Prospect, student debt cancellation is a virtual necessity to avoid widespread austerity and full-scale economic collapse in the coming months. Billions of dollars in deferred loans and interest payments due in January could spell doom for borrowers, especially those who may have lost work or housing during the COVID-19 pandemic. With no meaningful coronavirus relief in sight, large scale student debt relief is the absolute least a newly minted Biden administration could do, not just to stimulate the economy but potentially save it.
Arguments against student debt relief mostly boil down to one point: that those who have already paid off their student loans (or never had any) will be resentful of those who are relieved by a policy cancelling them. Logically, that’s the equivalent of saying that finding a cure for a disease is unfair to those that have already beaten it.
Student loans are fundamentally predatory, with interest rates designed to make them virtually unpayable over long periods of time. Resentment from people who’ve paid off loans or never attended college is oversold. According to polls, even those who haven’t held any student debt favor cancellation. If Democrats are convinced targeting or resentment really is the problem, as Bharat Ramamurti explains, executive action could create stipulations for people who didn’t attend college. But by (likely) looking for a Congressional solution, Biden is drastically reducing the impact he could have in an instant. By the time his proposed policy becomes concrete, it would hardly be surprising to find out the stipulations of “economic distressed” pares the qualifications down and limits relief to a few thousand borrowers.
For those concerned about “targeting” student debt cancellation, you can vary the amount of debt cancelled by income level, should you want to. If you’re concerned it won’t help people who never attended college, you could pair it with executive actions that do that. 8/
— Bharat Ramamurti (@BharatRamamurti) November 16, 2020
Student debt is a massive problem that requires massive imagination to solve. The COVID-19 pandemic has only made the need for that imagination greater. But as long as President-elect Biden insists on governing from inside a box of his (and Democrats’) own making, not much is going to come from it.