The point of Student Loan "forgiveness"
the midterms change everything
On October 21, 2022, President Joe Biden made remarks at Delaware State University regarding his Executive Order “cancelling” $10,000 of student debt for most borrowers and $20,000 for the most protected.
“Eight weeks ago, I announced that my administration is going to provide $10,000 in debt relief to everyone and then — who has that much debt, or up to that much debt — and 20 grand if you received a Pell Grant and your income was under $125,000. It’s a plan for people who took out federal student loans before July of this year.”
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We fight for the working class!
Most of the punditry after the Administration’s unilateral announcement has been about the “working class”. Suddenly, everyone on TV knows exactly what a “working class” person is and how much the student loans will help or hurt them. But of course, it is election season.
One might say for the Democrats, working class people are represented by the first person to go to college in a family that never thought they could afford it. Perhaps they’re from an inner city or an immigrant community. After all, everyone knows debt hurts the poor and “marginalized communities” more than it hurts everyone else. It’s entirely just therefore to help them on their journey by providing $10-$20k in cancellation.
One might say for the Republicans (and everyone else), working class people are represented by the enterprising plumber who picked up a trade out of high school and never went to college. Having incurred no debt, and now making more than his peers who either finished college or dropped out, It’s entirely unjust to make him pay for the mistakes of a thirty something middle-class raised person turned Starbucks barista covered in tattoos with dyed hair who can’t even get a coffee order correct.
Given their plausibility, hopefully you’re seeing that both of these narratives are only as real to the degree you want to believe one over another. This is to say, we can easily envision both of these people, in some form or fashion; both of these stories can mapped onto the experiences of at least 2 people. What makes one person’s injustice worse than the other? That my dear reader, is what democratic politics are all about, especially in The Cult of American Democracy. The moral edge goes to the side you agree with politically.
The Administration does not particularly care whether your student loans are forgiven as I will demonstrate shortly. With few exception, there were no popular voices in the halls of Congress warning of the consequences of making cheap debt available to potential college students. There was no concern given to the financial incentive created for Universities to continually increasing tuition. Here’s what your humble author wrote in 2020
In reality, you can pay off a loan, settle for a smaller amount, or have the bank in question forgive it entirely. You can also have someone else pay the balance.
While there will be much talk about student loans over the coming years, and a lot of words used to masquerade what the government will do - at the end it will simply be a bailout of big banks.
The Biden Administration is aware that there is no “Constitutional” authority for this unilateral move by the Executive Branch, even Nancy Pelosi admitted as much in 2021 saying
“People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
The reasons for announcing and pushing the student loan forgiveness then is quite obvious - it’s politically profitable for the midterm elections. The legal system will slowly work to the inevitable conclusion - that despite its popularity, the President cannot act alone to forgive student debt.
This case will almost certainly go to the Supreme Court, but by the time they come to a decision over whether the President can act, the midterms will have come and passed, with either the Republicans winning the House and/or Senate or the Democrats maintaining their slim majority over both houses.
If they win, the Democrats can use the popular support for the President’s policy (and the millions of American’s who have already signed up for forgiveness) to spend the next 2 years to pass this kind of legislation. If the Democrats lose, however they get the best possible outcome, a campaign cornerstone for 2024 with the establishment Republicans playing the bad guy they love to pretend being.
A solution that bites back
For what it’s worth - I think Republicans should support student loan forgiveness by passing a bill requiring universities to share in the cost they incurred on millions of students. Many universities have endowments that number in the millions or billions of dollars. It seems only fair that the institutions which have benefited the most from dramatic tuition increases should have to shoulder the burden in repayment. If a side-effect of this means some poorly run and potentially prominent universities go out of business? So much the better.
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