Topline
President Joe Biden’s decision Wednesday to cancel at least $10,000 of federal student loan debt for most borrowers was welcome news for progressives, who touted it as the culmination of years of pressing for student loan relief, but several moderate voices sided with conservatives and slammed the move as reckless.
President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White … [+]
Key Facts
Prominent progressives like Sen. Elizabeth Warren (D-Mass.) and House “Squad” members including Reps. Ilhan Omar (D-Minn.) and Ayanna Pressley (D-Mass.) championed the decision, with Pressley saying it is “going to change and save lives.”
Sen. Bernie Sanders (I-Vt.), widely considered the most left-leaning senator, called the move “a big deal” but added he believes “we have got to do more” to make higher education more affordable, such as making public colleges tuition free, while more moderate Sen. Raphael Warnock (D-Ga.) called the cancellation “only a first step.”
The vast majority of elected Democrats backed Biden’s plan, including House Speaker Nancy Pelosi (Calif.) and Senate Majority Leader Chuck Schumer (N.Y.), even though Schumer pushed Biden to forgive $50,000, while top Republicans like Senate Minority Leader Mitch McConnell (Ky.) blasted it as “socialism” that will benefit wealthy Americans and increase inflation.
Some voices associated with the moderate wing of the GOP strongly sided with their more conservative counterparts, including Sen. Mitt Romney (Utah), who called debt forgiveness a plan “to bribe the voters,” while Sen. Bill Cassidy (La.) said the decision represents a “spit in the face” to struggling families, citing an analysis from the Penn Wharton Budget Model that suggested debt relief will disproportionately benefit Americans with relatively high incomes.
Economist Jason Furman, a Democrat who served as chairman of the Council of Economic Advisers under former President Barack Obama, was one of the few moderate Democrats to publicly oppose the move, tweeting that “pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless.”
Larry Summers, who served in economic roles under Obama and former President Bill Clinton, has long voiced concern about canceling student loan debt, and tweeted earlier this week that “student loan debt relief is spending that raises demand and increases inflation.”
Surprising Fact
Former President Donald Trump posted 21 times on his Truth Social platform after the White House announcement, but none of the posts made mention of the student loan forgiveness. Trump instead focused his attention on the recent FBI raid at Mar-a-Lago.
Key Background
The White House announced Wednesday that Biden plans to cancel $10,000 of student loan debt for borrowers making less than $125,000 a year, and $20,000 for Pell Grant recipients below the income threshold. A pause on student loan repayments that has been in place throughout the Covid-19 pandemic will also be extended “one final time” through the end of the year. Biden’s campaign promises included a vow to cancel $10,000 in student debt per borrower, but he reportedly agonized at times over whether he had the legal authority to cancel debt without congressional approval, and he faced pressure from many Democrats to cancel more. The White House has brushed off concerns that student debt forgiveness will worsen historically high rates of inflation, but economists appear divided on the issue and many Americans are concerned about that possibility. Some 59% of respondents in a recent CNBC/Momentive poll said they are concerned about debt forgiveness contributing to inflation.
Further Reading
Most Americans Worry Student Loan Forgiveness Will Worsen Inflation, Poll Finds (Forbes)
Biden’s Student Loan Forgiveness Plan: Here’s Who Benefits Most—And Least (Forbes)
Source: https://www.forbes.com/sites/nicholasreimann/2022/08/24/progressives-praise-bidens-student-debt-cancellation-as-gop-and-moderates-voice-concern/