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Why Biden’s Student Debt Plan Never Took Off

Even before the Supreme Court struck down Biden’s student debt relief plan, it was a big ask of Republicans – and even some Democrats – who thought it cost too much, achieved too little and was a misplaced priority.

The Supreme Court ruled Friday that a plan to spend some $400 billion in taxpayer money to pay off the debts of some student loan holders overstepped President Joe Biden’s executive authority. But, legality aside, the merits of the spending plan have long been questioned – even by some in the president’s own party.

Though Republicans have been largely united in opposition to student debt relief, it has been a policy focus for progressive politicians, spurring intra-party conflict over the wisdom and specifics of the plan.

Biden himself dragged his feet introducing the relief program, proposing it after months in office, bowing to relentless pressure from the progressive wing of his party, which helped deliver his 2020 victory despite their reservations about his candidacy. The plan fulfilled one of Biden’s key campaign promises to those progressives.

Some Democrats, including Rep. Nancy Pelosi of California, in the past not only have openly questioned whether Biden had the authority as president to unilaterally cancel student debt but expressed skepticism at the principle itself.

“Suppose your family was not – your child just decided they, at this time, did not want to go to college, but you’re paying taxes to forgive somebody else’s obligations,” Pelosi, then the House speaker, said during a July 2021 news conference. “You may not be happy about that.”

Pelosi ultimately backed Biden’s plan but saw Chief Justice John Roberts use her own words against her in his majority opinion on the subject, in which he parroted another of her quotes from the same news conference: “As then-Speaker of the House Nancy Pelosi explained: ‘People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.’”

And recently, Congress voted to repeal the president’s plan: A resolution that blocks it from becoming law and also restarts monthly loan payments passed the Republican-led House and squeaked by in the Democratic-controlled Senate with the help of two Democrats – Sen. Joe Manchin of West Virginia and Sen. Jon Tester of Montana – and independent Sen. Kyrsten Sinema of Arizona.

The specifics, too, have invited criticism from wings of the party who thought it went too far in providing relief and didn’t go far enough.

Progressives came to regard the plan as a “first step.” Some have pushed Biden to forgive up to $50,000 in student loan debt, but the president resisted calls to do so.

On the other hand, members of Congress – including Manchin – have said the plan goes too far.

“I just thought that it was excessive,” Manchin said last year after Biden introduced the program. The moderate Democrat and other Democrats have also suggested that those who didn’t go to college shouldn’t bear the cost of the debt.

“There are already more than 50 existing student loan repayment and forgiveness programs aimed at attracting individuals to vital service jobs, such as teachers, health care workers, and public servants. This Biden proposal undermines these programs and forces hard-working taxpayers who already paid off their loans or did not go to college to shoulder the cost,” Manchin said in a statement after the vote to repeal the plan.

Supporters counter that eliminating debt for lower earners will have broad, positive effects on the entire economy and will particularly benefit individuals of marginalized groups and those in lower socioeconomic spheres – not “doctors and lawyers,” as Republicans insinuated.

About 45 million borrowers hold roughly $1.7 trillion in federal student loan debt in the U.S. Biden’s debt relief program, however, would not have wiped out student debt for all borrowers – he Biden has repeatedly said that he was opposed to such blanket relief. Why Biden’s Student Debt Plan

There’s no doubt that the cost of college education is ballooning. In the past decade, total outstanding federal aid has increased by 65% and, after housing debts, student loans have been the highest share of consumer debts since 2010.

Instead, under the plan, borrowers making $125,000, or $250,000 for married couples, to have $10,000 in student loans wiped clean while borrowers who received federal Pell Grants – tuition-assistance available to students from low- and middle-income families – would have been eligible for $20,000 in student loan debt cancellation. In addition, anyone with an undergraduate loan would have been able to cap repayments at 5% of their monthly income under a new income-driven repayment plan.

The White House estimated that, in total, some 40 million borrowers would qualify for the relief, with nearly 90% of the benefits going to out-of-school borrowers earning less than $75,000 per year. Biden issued the program as an executive order last year.

The plan has, too, raised questions about the prioritization of student debt over other types of debt that Americans hold.

By one estimate from the Kaiser Family Foundation last year, some 41% of American adults have health care debt, with 1 in 5 saying that they don’t believe they will ever be able to pay the debt off. A recent report from the Consumer Financial Protection Bureau estimated that $88 billion of medical debts were in collection in mid-2021, though the report also describes how the estimate is likely higher, “since not all medical debts in collections are furnished to consumer reporting companies.” That’s all led some to question whether a massive relief plan wouldn’t be more beneficial targeting holders of other types of debt.

Collectively, Americans also hold about $1.6 trillion in debt on car loans and a $1 trillion balance on credit cards – all of which pales in comparison to more than $12 trillion in housing debts, a figure that has increased 54% since a 2013 low.

Still others say student debt relief was just too expensive. With a federal debt that has soared from just under $8 trillion at the outset of the Great Recession in 2008 to more than $25 trillion today after waves of massive government spending during the coronavirus, the plan would add to U.S. obligations at a time when both parties are looking for ways to trim spending.

In addition, assuming a $400 billion price tag by a stroke of the pen would be historic compared to some of the government’s other existing priorities.

But Biden rejected that argument in an address on Friday after the ruling, invoking recent coronavirus-era loan relief tools, most notably the Paycheck Protection Program.

“You know how much that program cost? $760 billion,” Biden said, referring to the mechanism for distributing loans to businesses that were then later forgiven. “The average amount forgiven in the PPP pandemic loan program – average amount forgiven was $70,000. Now, a kid making 60,000 bucks, trying to pay back his bills, asking for $10,000 of relief? Come on. The hypocrisy is stunning.”

Source : usnews