Democrats pressure Biden to resolve student debt crisis

Democrats pressure Biden to resolve student debt crisis

Democratic leaders, such as Rep. Ayanna Pressley (D-Massachusetts), are encouraging President Joe Biden to tackle the severe student debt crisis, which some say is widening racial and gender pay gaps. (Courtesy picture)

By Laina S. Miller
Capital News Service Washington Bureau

Democrats in the House and Senate have introduced bills calling on President Joe Biden to forgive student loan debt, which they say is widening racial and gender wage gaps and exacerbating already deepening economic problems. by the pandemic.

Canceling student debt could have a big positive effect on the U.S. economy, according to the bills’ sponsors, Senate Majority Leader Chuck Schumer (D-New York) and Rep. Ayanna Pressley (D -Massachusetts).

“The student debt crisis is a matter of racial and economic justice and we must finally begin to treat it as such,” Pressley said in a statement. “Cancelling student debt is one of the most effective ways to bring direct relief to millions of people, help close the racial wealth gap, stimulate our economy and begin to provide a fair and just recovery.”

The bills are supported by 58 cosponsors in the House and 16 cosponsors in the Senate, and bolstered by the protections against student loan forgiveness taxation that the senses. Elizabeth Warren (D-Massachusetts) and Bob Menendez (D-New Jersey) joined the COVID relief bill passed in early March.

But Biden has already publicly stated that he would not support the passage of these bills. Although he thinks he can forgive some of the student debt, he disagrees with the amount Schumer and Pressley are proposing.

White House Chief of Staff Ron Klain told Politico on Thursday that Biden had asked Education Secretary Miguel Cardona to review the president’s legal powers to cancel student debt.

“And hopefully we’ll see that in the next few weeks,” Klain said. “And then he’ll look at that legal authority, he’ll look at the political issues around that and he’ll make a decision.”

According to the Federal Reserve, approximately $1.7 trillion is currently owed to the government in federal student loans. Ten years ago, federal student loan debt was about $845 billion, so the amount of current debt has increased about 102% since 2010.

By removing the burden of student loans from borrowers’ portfolios, debt cancellation could boost consumer spending and boost the U.S. economy, according to a 2018 study published by the Levy Economics Institute of Bard College, a think tank non-partisan on public policy.

Student loan debt has lurked in the background of American politics for several years.

Eighteen bills dealing with student debt have been introduced since the 117th Congress convened on January 3.

Several former presidential candidates, including Biden, have included student loan forgiveness as an issue in their campaigns.

In a {Medium} article written during his 2020 campaign, Biden suggested that as president he could “forgive all federal student debt related to undergraduate tuition at public colleges and universities in two and four years for debt holders earning up to $125,000,” as well as canceling a significant amount of student debt and expanding federal student loan forgiveness plans.

These suggestions made it apparent that Biden would support a student loan debt forgiveness plan similar to those suggested by Pressley and Schumer’s student loan forgiveness bills.

But Biden’s promises as president have been reduced.

During a CNN town hall on Feb. 16, Biden was confronted about the student loan debt issue by a member of the public, Joycelyn Fish of Racine, Wisconsin.

“The American dream is to be successful,” Fish said. “But how can we achieve this dream when debt is the only option to earn a degree for many people? We need student loan forgiveness beyond the potential $10,000 offered by your administration. We need at least $50,000 minimum. What will you do to make this happen? »

“I’m not going to make that happen,” Biden said. He cited theoretical graduates from schools like “Harvard and Yale and Penn,” saying forgiving their student loans would divert “billions of dollars” that could be spent on early education.

But universities like Ivy League colleges aren’t the biggest sources of student debt, according to the Department of Education.

Very few people leave universities like Harvard and Yale with student loan debt, and even fewer continue to be in debt years later, according to the Department of Education. The majority of student loans are taken out by students attending less expensive two- or four-year schools.

Most of the students who borrow money for college are middle-class or lower-class students “who had to go into debt to get into post-secondary education and are paying dearly for it,” Persis Yu, director of assistance for student loan borrowers from the National Consumer Law Center. Project, wrote in a Feb. 16 post responding to Biden.

But Sen. John Thune (R-South Dakota) disagreed that canceling student loans could support “low-income or disadvantaged people,” saying “high-income Americans could benefit the most” and calling the Democrats’ proposals “unfair”. ”

“Yes, a number of Americans have significant student loan debt,” Thune said. “But some of these Americans have taken on this debt for a career that will bring significant financial rewards.”

After all, it has been shown by the Department of Education that a college degree has a positive effect on a graduate’s annual salary.

But the presumption that a post-graduation job will be enough to pay off student loan debt may be inaccurate, according to a recent study published by the Roosevelt Institute, a liberal think tank associated with the Franklin D. Roosevelt Presidential Library and Museum. Black students are more likely to take on debt to fund their education, but are less likely to graduate or see the benefits of a degree on their postgraduate pay, the study found.

Pressley was one of thousands of students who failed to repay their student loans.

“Like 85% of black students, I had to borrow; and like so many of those students, I also defaulted on those loans,” Pressley said. “Decades of systemic racism and discriminatory policies like redlining and predatory lending…have systematically denied black and Latino families the opportunity to build wealth, forcing our families to take on higher student debt ratios, just to be lucky to the same degree as our white counterparts.”

Hilary Shelton, director of the NAACP’s Washington office, said in a statement that “at too many times in our country, the African-American community and other communities of color have been excluded from real economic opportunities, relief and support”.

“Now the student debt crisis is making existing economic disparities worse,” Shelton said.

According to the Fed, more than 25% of indebted black Americans are in arrears and almost 20% of Hispanic Americans are in a similar situation. In Maryland and the District of Columbia, nearly a quarter of all student borrowers are making no progress in repaying their student loans, according to the Department of Education.

“Student loans are disproportionately held by female, black and Latinx student loan borrowers – providing relief to these borrowers would promote racial and gender equity,” Yu said. “Drawing lines to distinguish who deserves relief will inevitably leave out deserving borrowers.”

The Senate bill calling for the cancellation of student debt has been referred to the Committee on Health, Education, Labor and Pensions. The House bill was referred to the Committee on Education and Labor and the Committee on Ways and Means.

Robert P. Matthews