Biden Toys with Student Debt Cancellation
On April 6, President Biden extended the pause on student loan repayments through August 31, which means the 43 million Americans who owe $1.6 trillion in student loan debt are off the hook for another few months.
According to Biden, “If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans’ financial stability.”
Strangely, Biden is using the excuse of a weak economy to pause student loan debt repayments while his administration is telling the American people that the economy is “booming.”
For more than two years, the 43 million Americans with outstanding student loans have not had to make monthly payments. And, given that Biden has kicked the can down the road yet again, I am beginning to wonder if these 43 million Americans will ever be forced to repay them.
In March 2020, during the outset of the COVID-19 pandemic, President Trump signed a law suspending student loan repayments for 60 days.
However, as is all too often the case in Washington D.C., this “temporary” program has no end in sight.
What’s more, because Biden is receiving such pressure from the far-left flank of his party, it is well within reason to assume that the pause on student loan repayment could morph into cancellation over the foreseeable future.
For many months, prominent progressives such as Rep. Alexandria Ocasio-Cortez (D-NY), Sen. Bernie Sanders (I-VT), Sen. Elizabeth Warren (D-MA), and countless others have been applying pressure on Biden to forgo the pause in favor of outright debt cancelation.
As Ocasio-Cortez recently tweeted: “I think some folks read these extensions as savvy politics, but I don’t think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty. It doesn’t have the affect [sic] people think it does. We should cancel them.”
And, based on recent comments from White House Press Secretary Jen Psaki, the administration is considering this option more than ever.
When asked if Biden is considering a “possible executive-level cancellation on a wide scale of student debt,” Psaki responded, “He has not ruled [it] out.”
She added, “I would note that, again, he would encourage Congress to send him a bill canceling $10,000 in student debt, something that he talked about looking forward to signing on the campaign trail.”
So, where does the American public stand on the issue of student loan cancelation? Well, that depends primarily on their age and party affiliation, unsurprisingly.
According to a December 2021 Morning Consult poll, among all voters, only 19 percent want all student loans forgiven while 28 percent don’t think a single penny in student loan debt should be canceled.
When broken down by age group, a whopping 34 percent of millennials want all student loans to be wiped away while only 9 percent of baby boomers agree.
Yet, the divide is most stark when party affiliation is taken into the equation. Among self-identified Democrats, a staggering 85 percent believe some amount of student loans should be forgiven. On the other hand, almost half of Republicans polled said no student loans should be canceled.
In the United States, contracts are sacred. When one enters into a contract, he is obligated to fulfill their end of the agreement. However, if student loan debt is canceled by presidential fiat, I cannot help but wonder if we may rue the day.
After all, today it is student loans that are potentially on the chopping block. But who is to say it won’t be credit card debt, auto loans, or even mortgages that could be the next thing leftists target for cancellation?
In short, canceling student loans, whether by executive order or via Congress, would set a terrible precedent whereby some Americans (those who did the right thing and paid back their student loans) would get shafted but those who didn’t fulfill their contractual obligations (for whatever reason) reap the rewards.
However, we must remember that loans can never be “canceled.” Someone, namely the American taxpayer, will end up footing the bill. Put another way, if student loan debt is indeed “canceled,” those of us (including this author) who paid our student loans back will end up subsidizing those who the government arbitrarily decides don’t have to pay back the money they borrowed. Not only is that blatantly unfair, but it could make a country already divided along partisan lines rip apart at the seams.
Chris Talgo (firstname.lastname@example.org) is senior editor at The Heartland Institute.