Forgive Student Loans

I have extremely low expectations from the Biden administration. The appointees so far mostly reinforce that, none more so than Tom Vilsack. But no one voted for Joe Biden because they thought he would change the country in some transformative way. He was still the worst of the major Democratic candidates, with perhaps Buttigieg and Klobuchar in the running too. And on issues like forgiving student debt, he’s already starting to move away from the hopes of radical Maoists like Chuck Schumer for massive action.

President-elect Joseph R. Biden Jr. is facing pressure from congressional Democrats to cancel student loan debt on a vast scale, quickly and by executive action, a campaign that will be one of the first tests of his relationship with the liberal wing of his party.

Mr. Biden has endorsed canceling $10,000 in federal student debt per borrower through legislation, and insisted that chipping away at the $1.7 trillion in loan debt held by more than 43 million borrowers is integral to his economic plan. But Democratic leaders, backed by the party’s left flank, are pressing for up to $50,000 of debt relief per borrower, executed on Day 1 of his presidency.

More than 200 organizations — including the American Federation of Teachers, the N.A.A.C.P. and others that were integral to his campaign — have joined the push.

And again, this isn’t some far left demand.

An economic working paper published by the Roosevelt Institute casts debt forgiveness explicitly in racial-justice terms. The total percentage of Black households that would benefit would be greater than white households, and the relative gains for those households’ net worth are far larger, the researchers found. The greatest marginal gains come from canceling the smallest debts; wiping out $20,000 would end student debt for half of all households with loans.

Senators Chuck Schumer of New York, the Democratic leader, and Elizabeth Warren, Democrat of Massachusetts, said in a joint op-ed last week that $50,000 debt cancellations would give “Black and brown families across the country a far better shot at building financial security” and would be the “single most effective executive action available to provide massive stimulus to our economy.”

But former government lawyers have warned that across-the-board forgiveness would face legal challenges from Republicans. And Mr. Biden has never publicly endorsed the idea. Some close to him say he recognizes the risks and consequences of bypassing Congress.

There is more consensus that the $10,000 proposal would reach the most vulnerable borrowers, the estimated 15 million who have low debt under $10,000, often because they did not complete their degrees.

Some experts argue that Mr. Biden has other, more progressive options for taming student debt, such as improving existing repayment plans that link borrowers’ loan payments to their incomes.

$10,000 is….something? But it’s not enough to make a major difference in the life of almost anyone. If you actually owe less than $10,000, your payments are either very low or you could adjust them to make them very low if you wanted. If you owe $40,000, going down to $30,000 may make a difference for you several years down the road. If you owe $100,000, who even cares. $50,000 though, that’s a difference maker. That eliminates entire histories of student debt and makes paying it back for people above that threshold much more popular. Of course, you could go all the way and eliminate it all. But even if you think that’s a bridge too far, $50,000 is far more compelling than $10,000. Barely even worth the political capital at that level.

I honestly don’t get the dismissal of student loan forgiveness that we see at some level across the political spectrum. No, it’s not as a rule going to help the poorest in our society. But it is going to help a lot of people. What people seem to forget is that a lot of college debt is in community colleges and trade schools, some of which are quite expensive. Plus there are lots of first generation and working class college students out there. This debate is being locked in as a giveaway to the upper middle class because everyone who writes for DC publications went to the Ivies or other major schools and the vast majority come from privileged backgrounds.