AMAC Exclusive – By Shane Harris
With the midterms just over three months away, Democrats are ramping up the pressure on President Joe Biden to implement mass student loan forgiveness in a ploy to energize the party’s base for the midterms. But even as the Department of Education says it’s prepared to cancel all student loans at a moment’s notice, there are growing signs that mass student debt cancellation – in addition to being a dangerously irresponsible fiscal policy – may not be the political winning issue Democrats think it is.
According to reporting from Politico earlier this week, “top Education Department officials have developed detailed plans to carry out student loan forgiveness for millions of Americans as they wait on President Joe Biden to make a final decision” – a decision that some Democratic insiders believe could be coming in a matter of days. After promising on the campaign trail to forgive at least $10,000 in student loan debt per borrower, Biden has thus far opted to only extend the pause on loan payments that began as a pandemic relief measure in March of 2020. This strategy has frustrated many Democrat officials and voters, who had hoped that Biden would make loan forgiveness a priority immediately upon entering office.
One major reason for the delay appears to be internal debate among Democrats, and even some senior officials within the White House, about what Biden’s student loan forgiveness program should look like. While Biden promised $10,000 per borrower when he ran for president two years ago, some far-left congressional Democrats like Senator Bernie Sanders of Vermont have called on Biden to cancel all $1.8 trillion of student debt held by the federal government. The administration is also reportedly weighing whether or not to place an income cap on who would be eligible for debt cancellation, with one internal Department of Education memo proposing a threshold of $125,000 for individuals and $250,000 for families.
Regardless, Biden’s decision on student loans will have to come in the next few weeks, as the current pause on loan payments expires August 31. Biden could extend the pause again through Election Day, but doing so would miss what many Democratic strategists believe to be a key opportunity to boost their prospects this November. Specifically, Democrats hope that student loan forgiveness will inspire turnout among voters under 45 – a cohort of Americans that collectively holds more than 54% of all student loan debt and voted for Biden 56%-42% percent in 2020, but has soured on him since.
But even if Biden does cancel some or all student loan debt, there is reason to question how much goodwill it will actually earn Democrats with voters. The vast majority of student loan debt is held by higher-income households, meaning that student loan forgiveness is in effect a government welfare plan aimed squarely at the comparatively wealthy – even as poorer Americans suffer more as a result of inflation. A family struggling to afford gas and groceries on the median U.S. household income of $67,000 would be justified in being enraged at the fact that a household bringing in $250,000 receives tens of thousands of dollars in loan forgiveness from the federal government while they receive nothing. For every hypothetical voter that Democrats gain from Biden canceling their student loans, it is not unreasonable to think they might lose one (or more) voters who are resentful of the policy. (If Republicans aggressively prosecute the case, that is.)
Economists have also raised concerns that mass student debt cancellation would likely exacerbate already sky-high inflation rates and could lead to more economic turmoil as the country enters a recession. Even forgiving just $10,000 per borrower would cost some $230 billion – an alarming prospect for a country already suffering from the effects off too much government spending. As Ed Mills, an analyst with Raymond James investment bank, told CBS News, “If you had to put it [student loan forgiveness] in one bucket or another, it’s more in the bucket of contributing versus not contributing to inflation.”
As many conservatives have pointed out, “debt cancellation” is in itself a misleading term; from a financial standpoint, the debt would not be truly “cancelled,” only transferred. The burden of student loan debt would be assumed by the U.S. government, and by extension American taxpayers – many of whom did not go to college precisely to avoid having to pay back student loans.
Even parts of the liberal mainstream media aren’t on board with the plan. The New York Times Editorial Board slammed student loan forgiveness back in May as “legally dubious, economically unsound, politically fraught and educationally problematic.” A Forbes article called it “bad policy and bad politics.”
Yet as with most other issues, the Biden administration seems beholden to a small cadre of far-left activists and politicians who drown out all other voices. With the litany of other crises weighing down Democrats’ electoral prospects, using student loan forgiveness as a political gimmick was never a particularly promising strategy. But given the economic state of the country and the specifics of the Biden plan, it may just be the final nail in Democrats’ coffin this November.
Shane Harris is a writer and political consultant from Southwest Ohio. You can follow him on Twitter @Shane_Harris_
We hope you've enjoyed this article. While you're here, we have a small favor to ask...
Support AMAC Action. Our 501 (C)(4) advances initiatives on Capitol Hill, in the state legislatures, and at the local level to protect American values, free speech, the exercise of religion, equality of opportunity, sanctity of life, and the rule of law.Donate Now