This week, President Biden announced his student loan forgiveness program … a long-awaited program to help those lower-and-middle income people who are struggling under a mound of student debt.  Since this is a program that helps real people, not wealthy corporate executives, it was to be expected that the Republicans would be up in arms, and they did not disappoint. It is reminiscent of the hue-and-cry when President Obama announced the Affordable Care Act, aka ‘Obamacare’.  I’ve read a number of editorials, both pro and con, but I think Robert Hubbell sums it up best …

Promises Kept.

Robert B. Hubbell

25 August 2022

       President Biden kept another campaign promise on Wednesday by announcing a student loan forgiveness program that will cancel up to $20,000 for certain borrowers. Importantly, the plan also provides relief to future borrowers by cutting in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income and forgives loan balances after ten years of payments. The White House Fact Sheet for Student Loan Relief contains the details of the plan. Per the Fact Sheet, the plan will

• Provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients
• Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for married couples.
• Extend the pause on federal student loan repayment will be extended one final time through December 31, 2022

          The Department of Education estimates that 43 million borrowers will receive some form of relief and about 20 million borrowers will receive complete forgiveness. The DOE estimates that 90% of all relief will go to borrowers earning less than $75,000.

          Biden’s proposal will improve the lives of tens of millions of Americans. For reasons difficult to understand, the backlash against Biden’s plan has been fast and furious. For Republicans, the hypocrisy writes itself. The GOP has described Biden’s loan forgiveness as “socialism” and a “moral hazard.” And yet, fifteen Republicans in Congress (or their business affiliates) received forgiveness of $16,193,000 in loans they received from the federal government under the Paycheck Protection Plan [emphasis added]—an average debt cancellation of more than $1 million, compared to a maximum forgiveness of $20,000 under Biden’s Plan. And then there is Donald Trump, who has petitioned for bankruptcy on six occasions to avoid paying the debts of his businesses . . . .

          The Editorial Board of the Washington Post seemed to take personal offense over the plan in an editorial entitled, Biden’s student loan forgiveness is an expensive, regressive mistake. The Board wrote:

          The loan-forgiveness decision is even worse [than the four month extension of the moratorium on loan repayments]. Widely canceling student loan debt is regressive. It takes money from the broader tax base, mostly made up of workers who did not go to college, to subsidize the education debt of people with valuable degrees.

          While the Post’s objection is technically true, it is also true for the following subsidies and credits: Trump’s 2017 tax cut for millionaires, oil company subsidies, export subsidies for US manufacturers, auto industry subsidies, lower tax rates for hedge fund managers (“carried interest deduction”), 100% deductibility for yachts purchased for “business purposes,” and deduction for 100% of the future depreciation for private jets in their first year of service.

          All of the above subsidies, credits, and deductions are regressive because—as the Post notes—“the broader tax base is mostly made up of workers” who are not millionaires, who do not manage hedge funds, who do not own oil wells, and who do not purchase yachts or private jets. And yet, the Post and others reserve peevish indignation for a program that helps middle- and lower-income earners who took a chance by investing in their futures and themselves.

         And there were complaints about “unfairness” by those who paid their loans or who do not qualify for loan forgiveness. Biden did what he could given the limits on the Department of Education’s ability to modify its loan programs. The fact that Biden crafted a plan that targets middle- to low-income earners was a reasonable compromise. Was it perfect? Of course not. But when that becomes the standard for achieving progress, all forward movement will cease. We should celebrate another promise kept by Biden.