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American Action Forum President Doug Holtz-Eakin argues that canceling student loans “does nothing” to improve education and “would be a burden on taxpayers.”
President-elect Joe Biden could keep his election promise to write off billions of dollars in student debt after Democrats toppled the Senate last week, securing a monopoly on power for the first time in more than a decade.
Biden’s incoming administration plans to ask Congress to immediately write off $ 10,000 in student debt for all borrowers – a move that will likely draw criticism from both Republicans wary of the country’s burgeoning deficit and Democrats. progressives who want the president to move further to the left on the problem.
Sen. Chuck Schumer, DN.Y., and Elizabeth Warren, D-Mass., Along with Reps Alexandria Ocasio-Cortez, DN.Y., and Ayanna Pressley, D-Mass., Urged Biden to use a frame to write off $ 50,000 in unpaid federal student loans per borrower.
BIDEN CALLS FOR CLEARING CERTAIN STUDENT DEBT, FACES PROGRESSIVE PRESSURE TO GO FURTHER
Warren said Biden could use existing executive power under the Higher Education Act to order the Department of Education to write off student loan debt. Previous estimates show that this proposal would offer a full discount to over 75% of borrowers and a partial discount to over 95%.
“We have to put pressure on the Biden administration,” Ocasio-Cortez told Punchbowl News last week. “This whole thing, ‘We can’t write off student loan debt,’ is not going to fly.”
But Biden said it was “questionable” that the president had the power to write off $ 50,000 in student debt without Congressional approval.
“I’m going to be in trouble for saying that, [but] arguably the president may have the executive power to write off up to $ 50,000 in student debt, ”Biden told the Washington Post in December. “Well, I think that’s pretty questionable. I’m not sure of it. I’m unlikely to do that.
Under the legislation approved by Biden, financially troubled borrowers would immediately be reimbursed $ 10,000 in student debt. The government would also cover monthly loan payments for people with private student loans until September 2021 and write off $ 10,000 of their debt.
AOC INSISTS BIDEN MAY USE EXECUTIVE ORDER TO CANCEL STUDENT LOAN DEBT
“Immediate cancellation of $ 10,000 in student loans, helping struggling people over there,” Biden said in November. “They have to make choices between paying their student loan and paying rent. Those kinds of decisions.
Critics of canceling much of the debt have also argued that it would disproportionately benefit high-income people who likely did not lose their jobs during the recession caused by the pandemic. Over 70% of laid-off workers do not have a bachelor’s degree, including 43% who did not attend college at all.
Less than a third of all student debt is held by households without a bachelor’s degree, while almost two-fifths of the debt is held by households with a graduate degree. A recent survey by the Pew Research Center shows that most of the economic suffering of the crisis is concentrated among the less educated.
Responsible Federal Budget Committee Analysis Shows Student Debt Cancellation Is Ineffective Stimulus: Eliminating $ 1.5 Trillion In Loans Would Mean Only $ 90 Billion Or Less In Cash available to spend in 2021 and $ 450 billion over the next five years. .
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“The majority of those most affected by the current economic crisis probably have little or no student debt,” the analysis indicates, noting that over 70% of the unemployed do not have a bachelor’s degree. “Blanket student debt cancellation is unlikely to be well targeted to those experiencing loss of income. It is also not well targeted to those with low incomes.
Outstanding student debt has doubled over the past decade, reaching nearly $ 1.7 trillion. About one in six American adults owe money on federal student debt, which is the largest amount of non-mortgage debt in the United States. It has been cited as a major obstacle to the “economic life” of the people by Federal Reserve Chairman Jerome Powell.
Biden also pledged to extend the Trump administration’s hiatus on federal student loan payments, which is set to expire this month. It’s unclear how long Biden would extend the payment freeze.
“On day one, the president-elect will order the Department of Education to extend the existing pause on student loan payments and interest for millions of Americans with federal student loans,” said David Kamin, new deputy director of the National Economic Council.
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