Biden is close to making a decision on student loans as inflation worries mount
For months, internal talks have circulated over whether the president actually has the legal authority to unilaterally call loans, not to mention Biden’s own continued skepticism that calling loans violates principles forged as a pre-baby boomer who represents a state that is the home country of consumer debt.
For the past few weeks, however, stakeholders have told CNN that almost every internal conversation about what to do has ultimately turned to whether debt relief will feed inflation, just as Democrats are hoping the Interest rates begin to fall before the midterms. After spending much of 2021 worrying that they wouldn’t grow big enough in the face of the crisis, the economic situation — including the threat of sliding into a recession by next year — is making Biden and his insiders sick Circle nervous about getting bigger at all.
Forces inside and outside the White House are urging Biden to announce his cancellation decision along with the expected end of the moratorium on student loan payments that began during the pandemic under the Trump administration and is due to expire on August 31 after two Biden extensions. The goal is to make the dual announcement by early summer so borrowers can prepare.
Outside the White House, several involved Democrats are once again seeing a familiar Biden pattern: He lets himself be defined by the long and torturous process rather than the end result, while agreeing to a priority of his party’s liberal wing, but with a compromise that fuels grievances his heart is not really in it. In a medium-term environment where Democrats could use all the help they can get, Biden’s hesitation robs himself of any political advantage he could get, especially among younger and black voters who would statistically benefit most from forgiveness and enthusiasm for Democrats has crashed.
“Every day he drags on — he might end up doing the right thing and not getting the proper recognition,” said Rep. Ro Khanna, a California Democrat who co-chaired Senator Bernie Sanders’ 2020 presidential campaign and says, that progressives must accept a middle ground on this issue. “If he announces it and says, ‘I’ll do it’, he looks determined and gets the political approval.”
Progressives warn of disappointment
Some progressive leaders, sensing they are not getting everything they want, are already preparing to express their disappointment even if Biden makes a final decision that would be higher than the $10,000 in forgiveness he received during the campaign promised 2020.
“The longer the administration waits — apparently because it’s figuring out how many people to exclude from a cancellation program — the less grateful people will be because they have to keep fighting all the way through,” said Rep. Mondaire Jones, a progressive Democrat from New York who discussed student debt relief with Biden at a meeting in the Roosevelt Room of the White House last month.
But Jones said he could be content with $10,000 forgiveness, arguing that it could be seen as money offsetting inflationary increases in other expenses borrowers had to worry about.
“People are going to feel a substantial improvement in their lives with $10,000 or more of debt relief — that’s $10,000 or more that they wouldn’t have had had it not been for the president’s cancellation,” he said.
Part of Biden’s meetings with Senate Majority Leader Chuck Schumer and Sens. Elizabeth Warren and Raphael Warnock at the White House last week was consumed by them arguing again that he needs to think more broadly about how many and which Kind of people doing this would be affected by forgiveness.
In conversations with Biden and top aides like White House Chief of Staff Ron Klain, Warren likes to point out that only 2% of Harvard students graduate with debt, but half at the University of Delaware — which happens to be Alma Mater to the President and is one of the schools he will be addressing this weekend.
She will point out that 91% of students at historically black colleges and universities graduate on loans. She will point out how many people have student debt who haven’t even completed enough courses to graduate and the disproportionate racial distribution which she counts as only 6% of white borrowers still paying their loans after 20 years , compared to 96% of black borrowers.
There’s a direct political impact on how many people forgiveness can touch, depending on whether Biden lands $10,000, $20,000 or more, Warren points out. And as for the argument that the executive branch’s termination could be challenged in court, she argues that the government owns the contracts, so Republicans or other opponents of the move would have to find someone to say he or she was fine was harmed to sue to stop the move.
Jones, Warren and others have repeatedly pointed out to the White House that Biden has used his powers to delay payments, and no Republican has sued about it.
Warnock — who was attempting to keep his Senate seat in Georgia in the fall — focused his argument with Biden on who would be involved in forgiveness in Georgia, telling the president about all the people who speak to him after Sunday service at his home church in Atlanta.
The decision is overshadowed by inflation
Other leaders on the Hill have tried to calibrate the pressure on the White House. Massachusetts Rep. Ayanna Pressley, while not involved in the call with Biden last week, spent her time rallying support for a letter from the full Congressional Black Caucus, timed to coincide with the meeting, stating that “The student loan debt crisis is a racial and economic justice issue disproportionately impacting black communities across the country.
While the CBC letter didn’t include a specific number, Pressley was clear about what she would consider acceptable, saying $10,000 per borrower would barely cover interest for some of the most stressed borrowers and that it would be cumulative about $250 billion would be a drop in the bucket compared to America’s $2 trillion in student debt.
Fear of inflation is also circulating among progressives.
“He should cancel everything. The problem is that because we haven’t put in place price-gouging guard rails, inflation could shoot up,” New York Congressman Jamaal Bowman said.
Reflecting some of the caution among moderate Democrats in his chamber about the cancellation, Schumer has not called a show vote on the issue, though he attended the most recent White House meeting and repeatedly urged Biden to take the step .
Biden urged into action
White House staffers have had trouble concealing their own boredom lately, repeatedly telling reporters that there is no decision on the matter yet.
A White House spokesman reiterated that Biden’s extension of the moratorium on payments means that for 41 million borrowers “no one has had to pay a penny on student loans since the president took office,” with targeted debt relief of $18.5 billion for more than 750,000 Borrowers who meet the requirements of the Public Service Loan Forgiveness program.
Aides are sensitive to the idea that Biden promised deleveraging during the campaign, when all he said at the time was that he was in favour—not that he would do it himself. The spokesman added, “The President continues to support forgiveness of $10,000 through action by Congress.”
But with the midterm elections looming and Democrats in the White House or beyond not having much confidence in more victories in Congress until the fall, activists are urging Biden to move where he can.
Data for Progress, a progressive polling firm, found broad support for the cancellation — but no significant difference between the $10,000 and $50,000 cancellations among Democrats. It’s not like there are likely to be many voters for student debt, said the firm’s political director Marcela Mulholland. Instead, it’s a matter of enthusiasm.
“It’s really clear that we need to deliver tangible, real gains to our base,” Mulholland said. “The way the administration has acted so far, being lukewarm and flippant, has left people who are against forgiveness angry that student loan payments have not resumed and people who are wanting college debt (forgiveness) disappointed he didn’t.”
For many Democrats outside of the party’s progressive wing, that’s not the only problem.
“We’re on our way to 30% approval if the White House acts like Covid is past the line, but not for people with college debt,” said a Democratic strategist involved in several midterm campaigns. and was initially referring to the administration trying to resist ending the pandemic restrictions on Title 42 immigration. “Voters know when Covid is being used as a cover to grant political wishes.”
For all the insider focus on the process so far, Mulholland argued that Biden still has an opportunity to capitalize on the overwhelming majority of voters who never tune in to the back-and-forth in Washington.
“What gets most voters conscious,” Mulholland said, “is the decision at the end of the day: ‘Do I have to make my student loan payments or not?'”