Jhe student loan debate is the latest issue in which President Joe Biden finds himself caught between the centrist and liberal wings of the Democratic Party.
Critics say Biden hasn’t done enough to address the $1.7 trillion student debt burden, while more conservative voices point to the need for fiscal responsibility for taxpayers who would be responsible for any “cancellation” of the debt.
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“[The Biden administration] has been unnecessarily slow to reach out to for-profit colleges and student debt service officers and too slow to provide relief to student creditors,” said Jeff Hauser, executive director of the Revolving Door Project.
While Biden has widened The student loan repayment hiatus began under former President Donald Trump until May 1, with the latest controversy stemming from promises by his Department of Education to reform the way it handles bankruptcy applications. A report from the daily poster detailed how the agency filed a bankruptcy petition against a Delaware man with epilepsy who owed nearly $100,000 and had never made any payments.
In another case, a single Alabama mother of three who owed $111,000 while earning less than $22,000 a year won a lawsuit to have the debt forgiven, but the Biden administration did appeal the decision. After the cases came to public attention, the Ministry of Education said it drop both cases.
Biden played a role in making it difficult to escape student debt, even through bankruptcy, by backing a 2005 Senate bill that Hauser calls a “pro-creditor approach to bankruptcy.”
“This approach primarily prevented student loans from being discharged in a bankruptcy,” Hauser said, adding that Trump’s six bankruptcies before running for president showed the system’s hypocrisy.
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But there’s a good reason federal student loans are treated differently, argues Neal McCluskey of the Cato Institute — creditors are taxpayers who have no say in whether they lent money. .
“The taxpayer has to pay their taxes whether or not they agree to have it spent on these loans,” said McCluskey, director of Cato’s Center for Educational Freedom. “You have to remember that there are people who gave you that money who expect to get it back and who might need it.”
Instead, more focus should be on reducing college costs, he added, which will address the roots of the problem as a long-term solution.
According to Education Data Initiativethe federal government holds over $1.5 trillion in student loans, with the average borrower owing $36,510.
Liberal senators such as Elizabeth Warren and Chuck Schumer have called on Biden to “cancel” up to $50,000 in debt for each of the nation’s 43 million on loan. Biden has mentioned a $10,000 figure but wants it presented as a bill to Congress, again clashing with more liberal minds who say he can do it alone.
White House press secretary Jen Psaki was asked last week why Biden hadn’t pushed harder for taxpayers to absorb student loans.
“The president has made it known that he would be happy to sign a bill that all these members [of Congress] could work to pass off,” she replied.
A common criticism of student loan forgiveness proposals concerns who tends to hold the most student loan debt, with studies showing that it is usually wealthier people. A Brookings Institution analysis found that almost a third of student debt is held by the richest 20% of households, while only 8% is held by the poorest 20%. The proposals could therefore be regressive in the absence of income limits or other balancing measures.
But even some right-wing populist pundits have called on Congress to make changes, including Fox News host Tucker-Carlson.
“We can change the law in all sorts of ways. We can make colleges liable for loans in default like any other loan recipients they might co-sign,” Carlson said in 2020. “We could restrict loans students at schools that let tuition rise too quickly.If you’re scamming kids, we’re not going to give you a federally guaranteed loan.
Debt could cause young people to delay marriage and children, Carlson concluded.
While avoiding sweeping proposals, Biden has embraced smaller measures, such as pledging to reform the Department of Education’s bankruptcy rules, which are limited debt forgiveness for victims of for-profit college fraud and reforming existing programs, such as the Civil Service Loan Cancellation Scheme.
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But anything less than a blanket strike may not be enough for the liberal wing of the Democratic Party and voters who backed the presidential campaigns of Warren and Vermont Sen. Bernie Sanders.
“Biden doesn’t want to massively write off loans, but also doesn’t want to say he won’t,” McCluskey said. “He doesn’t want to alienate the left.”