On Aug. 24, 2022, President Joe Biden announced his over $400 billion initiative to cancel the student loan debt of millions of American borrowers. This was an advancement in, but not fulfillment of, his campaign promise to forgive all two- and four-year undergraduate federal student debt. The President’s Executive Action has attempted to use the 2003 Higher Education Relief Opportunities for Students Act to justify the plan; the HEROES Act was meant to provide debt relief to combat veterans returning home with outstanding or recently incurred debt.
The White House fact sheet alleges that the plan would affect four key goals of the Biden administration: (1) “provide relief for up to 43 million borrowers;” (2) relieve the debt burden from lower- to middle-class families; (3) assist people from all age ranges and (4) “advance racial equity.” Of the 43 million borrowers seeing relief, 20 million of them could potentially see their debt completely absolved. Those making under $125,000 and have received the federal Pell Grant qualify for $20,000 of cancellation, and those who have other loans qualify for $10,000 of debt forgiveness.
Immediately after the announcement, Republicans criticized the measure as a political “pay-out” to a population that is heavily Democratic. The American Action Network, a House Grand Old Party affiliated media organization, released a blistering and mocking ad campaign. In these ads, ostensibly working class, non-college educated professionals are “congratulating” college-educated professionals on receiving their degrees at the expense of the tax-payer.
In fact, according to Andrew Lautz, current Director of the National Taxpayer Union Foundation in a retrieved article of the NTUF Blog, the $400 billion handout will result in a representative tax burden of approximately $2,500 per tax payer. The White House has consistently misrepresented how the student loan policy will be paid, claiming that this scheme is paid in full since deficit spending is down nearly $1.7 trillion. However, according Lautz, deficit spending still outpaces total revenue; therefore, there is no extra revenue that can be allocated in order to pay for Biden’s student loan plan. The $400 billion plan will have to be paid for by increased borrowing or through tax increases.
Shortly after the official government website launched to allow student loan borrowers to apply for relief, the 8 Circuit Court of Appeals ordered an administrative stay, prohibiting the Biden administration from actually forgiving these loans—all of this according to reporter Ryan Saavedra for the Daily Wire. Several states, including Arkansas, have filed lawsuits challenging Biden’s program. They claim that Biden’s Executive Action using the HEROES Act is a violation of the division of powers outlined in the Constitution. These states claim that only Congress can pass legislation that intrudes into the private contracts of citizens with banks and educational institutions.
It’s highly unlikely that the Courts or legislatures will resolve this issue before the midterms in early November. Democrats were hoping to consolidate young, college-educated Democrats or sway swing voters, according to Christian Hall at Bloomberg News. But while it seems that issues like inflation, crime, and immigration dominate the public’s mind, it is not clear that a payout for young, college-educated (typically) Democrats will motivate the other 100 million voters to vote for Democratic politicians.
Photo thanks to Josh Appel