White House press secretary Jen Psaki stated on Friday that President Biden cancelling at least some share of student loan debt by way of executive order is “still on the table,” adding that a “decision” could be made in the coming months. But here’s the reality: If Biden doesn’t use his power to cancel at least a portion of student loan debt currently held by nearly 44 million Americans, especially with midterm elections approaching and with polls showing that younger Democratic voters have nearly thrown in the towel, it would be political malpractice.
People may be asking what caused this crisis. Simple: The cost of college has doubled in the past two decades, far outpacing the corresponding wage increase in that time period. Consequently, student loan debt has increased by 144 percent over a 13-year period from 2007 to 2020—now totaling a whopping $1.7 trillion.
Reigning in the cost of college going forward is desperately needed so that we don’t see the same scenario replay in a few years. But that won’t help the 43 million–plus saddled with, on average, $37,000 in debt, per the St. Louis Federal Reserve. And under U.S. law, it’s almost impossible to discharge your student loan debt by filing for bankruptcy.
That’s where Biden steps in. As numerous experts have laid out, he has the legal authority to cancel federally held student loans by way of executive order. After all, he has put on hold the obligation of borrowers to repay federally held student loans since he took office—recently extending that pause to August 31.
Putting aside political considerations for a moment, forgiving student loan debt of between $10,000 (as Biden promised he would do as a candidate) to the $50,000 number Senator Elizabeth Warren and other Democrats are calling for is good policy. Biden should also extend loan cancellation to people who took out federal loans to attend technical schools, as he did last year for the over 100,000 borrowers who attended the ITT Technical Institute chain, now defunct because the school engaged in fraud.
For starters, these loans have become an unfair albatross around the neck of millions of Americans. As I heard firsthand from countless callers to my SiriusXM radio show, this crisis is akin to the predatory mortgages that led to the Great Recession. People shared how hidden fees, not fully explained increases in costs and interest rates, etc., have resulted in their owing more today than 15 years ago despite making some payments. I even spoke to one caller in his seventies who explained how his monthly Social Security benefits are being garnished because of student loan payments he still owes decades later. (By law, up to 15 percent of your monthly Social Security payment can be withheld by the federal government to repay your student loans.)
There’s also the glaring racial inequity of student loan debt. As the Brookings Institution has detailed, four years after graduation, the average Black college graduate owes $52,726, while the average white college graduate owes $28,006. That inequity is greatly attributable to our nation’s wealth gap, in which the average white family has roughly 10 times the amount of wealth of the average Black family. Thus, Black students must take out more loans for college and beyond.
And eliminating a chunk of student loan debt would help our economy, since people would be free to spend that money elsewhere. Indeed, a 2018 study found that eliminating $1.4 trillion of student loan debt would boost our annual GDP by nearly $100 billion a year.
But let’s talk the political reason Biden must do this. We are just a little over 200 days from the November midterm and he’s stuck with an approval rating in the very low 40s. He can’t get his Build Back Better bill through Congress, nor the all-important voting rights legislation, due to congressional stonewalling by all the Republicans and a couple Democrats in the Senate. And there’s no easy solution to the inflation that’s plaguing our nation.
The president needs to animate voters for this midterm because, bluntly, our democratic republic depends on it, given the GOP’s embrace of autocracy, even arguably fascism. To those Democrats who are on the fence about cancelling student loan debt because they never had student loans, or paid them off, look at it this way: We need to use every weapon in our arsenal to save our republic. This is one way to do that.
If Biden cancels approximately $50,000 of student loan debt, it would mean 36 million Americans would no longer have that type of debt. I would imagine a huge chunk of those people would be greatly appreciative and in turn, hopefully, vote Democratic this November.
Sure, Republicans will try to spin by saying that the Democrats are only helping the “educational elite” who went to college. First off, many of the people with student loans never graduated college yet still are encumbered by debt. In fact, these people are three times more likely to default on their loans. Secondly, Biden should ensure that students who attended vocational schools and are overburdened by loans are helped as well—as he already did with those defrauded by ITT Technical Institute.
And, third, there’s the GOP hypocrisy—as there always is with them. In this case, it’s the GOP’s 2017 tax cut, which cost nearly $2 trillion and disproportionally benefited the wealthy and corporations. That was only supported by about 35 percent of Americans, yet the GOP enacted it to help their wealthy donors—as they literally told us at the time.
In contrast, recent polls found 62 percent of voters support student loan forgiveness. After all, these loans are money already spent by the federal government—not new spending.
To be blunt: Biden needs to do more to help animate voters for the 2022 midterm election—which, as we know, is all about turnout. Cancelling student loan debt—which is good policy and good politics—would be a big way of doing just that.