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All Gains Are Incremental

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Yes, the student loan relief created by Biden does not eliminate all student loans. No, it is not paradise on Earth. But every single economic program in this nation’s history has been incremental in implementation–Social Security, the National Labor Relations Act, the Fair Labor Standards Act, Medicare, Medicaid, Head Start, all of them. So you take the victory and build on that victory. Tressie McMillan Cottom on this with the student loan relief.

The Student Loan Law Initiative at the University of California, Irvine School of Law and the Higher Education, Race and the Economy Lab analyzed Biden’s executive order. They estimate that around 41 million debt holders will be eligible for some form of student loan forgiveness, and that 25 million of those people will be eligible for up to $20,000 in student loan forgiveness. Twenty million people, including 3.8 million Black borrowers, could have their entire debts canceled.

That isn’t full debt cancellation, but it will help a lot of people. And the people it will help most are those who got the rawest deal. That includes the millions of people who have debt but no degree — nearly one-third of all borrowers. It also includes people who took on student loans to pay for occupational degrees in blue-collar trades like cosmetology and mechanics. Republicans are criticizing the policy as giving handouts to the rich. They really want to implant the image of a Harvard liberal arts graduate getting a free pass. But cancellation is squarely targeted at the debt that working-class students have accrued to hold pretty working-class jobs. The G.O.P. will have a hard time telling those voters that this relief has not improved their lives.

Other parts of the policy address underlying problems that created the student loan boondoggle. Millions of people have paid their loans as promised, following the official guidance of student loan servicers, only to owe more than when they started with because of interest. This negative amortization made it nearly impossible for some borrowers to pay off their loans. And documented problems with public student loan forgiveness programs meant that this burden often fell heaviest on people with public interest careers, such as public defenders, teachers and social workers. Now, income-driven repayments for undergraduate loans will be capped at 5 percent of the borrower’s take-home income. If you don’t have a lot of discretionary income, that payment could be low — too low to cover interest on the loan. Previously, this gap added up and increased the total amount owed. Under new guidelines, the government will cover that interest as long as the borrower is making payments. This does not get rid of the scourge of negative amortization for all borrowers. But it does two things: It effectively ends it for public interest workers. That lives up to the promise of public service loan forgiveness, which is that it becomes possible for people to do the work that society desperately needs done without living in eternal debt peonage. It also gives us a model for expanding that option for more borrowers in the future. It is a safe bet that student debt cancellation organizers are paying attention to that possibility.

While idiots like Nate Silver and Noah Smith and Matt Yglesias bloviate about the impact of the loan program and while people on the left are understandably frustrated that it’s not more, what we have here is an important precedent. Imagine the idea of a Democratic primary in the future forcing candidates to articulate just how much in student loans they will forgive, how they will solve the higher education funding crisis, etc. It’s a huge win and we should see it that way.

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