Biden nears decision on student loans as inflation concerns mount

For months, internal conversations have swirled around whether the president actually has the legal authority to unilaterally cancel loans, not to mention Biden’s own lingering skepticism that loan cancellation violates principles forged in as a pre-Baby Boomer representing a state that is the home of consumer debt.

Over the past few weeks, however, those involved have told CNN that almost every internal conversation about what to do has ultimately turned to whether debt cancellation will fuel inflation just at the end of the day. when Democrats are hoping rates will start falling before the midterms. . After spending much of 2021 worrying about not going far enough in the face of the crisis, the economic situation – including the threat of tipping into a recession by next year – is making Biden and his entourage nervous. to the idea of ​​going any further.

Forces inside and outside the White House are urging Biden to announce his rescission decision in conjunction with what should be the end of the moratorium on student loan payments, which was launched during the pandemic under the Trump administration and, after two Biden extensions, expires on August 31. The aim is to make the double announcement at the start of the summer so that borrowers can prepare.

Outside the White House, several Democrats involved are again seeing a familiar Biden pattern: allowing himself to be defined by the long and tortured process rather than the end result, while accepting a priority from his party’s liberal wing but with a compromise that fuels complaints that his heart isn’t really in it. In a medium-term environment where Democrats could use all the help they could get, they say, Biden’s hesitation undermines any political advantage he might gain, especially among younger voters and voters. blacks who would statistically benefit the most from a pardon and whose enthusiasm for the Democrats has plummeted.

“Every day that he hangs around — he can end up doing the right thing and not getting the proper credit,” said Rep. Ro Khanna, a California Democrat who served as co-chair of Senator Bernie Sanders’ 2020 presidential campaign and said that progressives need to agree to common ground on this issue. “If he announces it and says ‘I do’, he looks decisive and gets the political credit.”

Progressives warn of disappointment

Some progressive leaders, feeling they won’t get everything they want, are already preparing to express their disappointment even if Biden makes a final decision that would be greater than the $10,000 pardon he promised to back during the 2020 campaign. .

Some are still asking for as much as $50,000 in relief, though few involved in the talks ever believed it was possible. Instead, they opposed any income requirement, arguing that it could weed out thousands of deserving borrowers who are either not receiving the benefit due to government bureaucracy or who have racked up hundreds of thousands of dollars in loans that they are still yielding despite higher wages now.

“The longer the administration waits — apparently because it determines how many people to exclude from a cancellation program — the less people will appreciate, as they continue to struggle all the while,” the Mondaire rep said. Jones, a progressive New York Democrat who discussed student debt forgiveness with Biden during a meeting in the Roosevelt Room of the White House last month.

But Jones said he might be happy with a $10,000 discount, arguing it could be presented as money that offsets inflationary increases in other expenses that borrowers have had to worry about.

“People will feel a material improvement in their lives with $10,000 or more of debt relief – that’s $10,000 or more they wouldn’t have had if not for the president’s cancellation,” he said. -he declares.

Close as Biden appears to make an announcement, the conversations were still caught up, in part, by the basics.

Part of Biden’s meeting with Senate Majority Leader Chuck Schumer and the Senses. Elizabeth Warren and Raphael Warnock in the White House last week was consumed by them, again arguing that he needs to think more broadly about how many and what kind of people would do it. be affected by forgiveness.

In conversations with Biden and top aides like White House Chief of Staff Ron Klain, Warren’s favorite stats include pointing out that only 2% of Harvard students graduate with debt, but half do so at the University of Delaware — which happens to be the president’s alma mater. and one of the schools he will be addressing this weekend.

She will point out that 91% of historically black college and university students graduate with loans. She will point out how many people have student debt who have never even completed enough courses to complete their studies, and the disproportionate racial distribution which, according to her figures, has only 6% of white borrowers still repaying their loans after 20 years, compared to 96% of black borrowers.

There is a direct political ramification of how many people the pardon can reach depending on whether Biden lands $10,000, $20,000 or more, Warren points out. And as for the argument that overruling by executive authority could be challenged in court, she argues that the government owns the contracts, so Republicans or other opponents of the decision should find someone to say he or she has been wronged so file a complaint to stop the move.

Jones, Warren and others have repeatedly pointed out at the White House that Biden used his authority to withhold payments and that no Republican has pursued this.

Warnock — trying to retain his Senate seat in Georgia in the fall — centered his argument on who in Georgia would be included in the pardon, telling the president about everyone who talks to him after Sunday services at his church. of origin. in Atlanta.

Inflation weighs on the decision

Other leaders on the Hill tried to calibrate the pressure on the White House. Massachusetts Rep. Ayanna Pressley, though not part of the conversation with Biden last week, spent her time supporting a letter from the entire timed Congressional Black Caucus for the meeting stating that “the crisis of student loan debt is a matter of racial and economic justice.” disproportionate impact on black communities across the country. »

Although the CBC letter did not include a specific figure, Pressley was clear about what she would consider acceptable, saying that $10,000 per borrower would barely cover the interest of some of the most burdened borrowers, and that the roughly $250 billion cumulative that would cover would be a drop in the ocean compared to the $2 trillion in student debt in the United States.

Inflation anxiety is also circulating among progressives.

“He should call it all off. The problem is inflation could skyrocket because we haven’t put in any price gouging safeguards yet,” New York Rep. Jamaal Bowman said.

Reflecting some of the wariness of moderate Democrats in his chamber over the cancellation, Schumer did not call for a vote on the issue, despite attending the last White House meeting and asking several times to Biden to make the move.

Biden in a hurry to act

White House aides have struggled lately to conceal their own annoyance at telling reporters over and over that there’s still no decision on the matter.

A White House spokesperson reiterated that Biden’s extension of the payment moratorium means that for 41 million borrowers, “no one has been required to pay a single penny of student loans since taking office. of the President,” with $18.5 billion in targeted debt relief to more than 750,000 borrowers who meet the requirements of the Public Service Loan Cancellation Program.

Aides are sensitive to the idea that Biden is seen to have promised to eliminate debt during the campaign trail, even though his statement then was simply that he was in favor of doing it – not that he would do it himself. same. The spokesperson added, “The President continues to support the $10,000 rebate through congressional action.”

But with the midterm elections looming and little confidence among Democrats in the White House or beyond for more congressional wins by the fall, operatives are urging Biden to move where he can. .

Data for Progress, a progressive polling firm, found broad support for the cancellation — but not a significant difference between the $10,000 and $50,000 cancellation among Democrats. It’s not that there are likely to be many single-issue student debt voters, said the firm’s political director, Marcela Mulholland. Instead, it’s a matter of enthusiasm.

“It’s really clear that we have to deliver tangible, real gains to our base,” Mulholland said. “The way the administration has gone about it so far, of being lukewarm and talkative, has meant that people who are against forgiveness are upset that student loan repayments haven’t resumed, and people who want student debt (sorry) are disappointed he didn’t.”

For many Democrats outside the progressive wing of the party, that’s not the only problem.

“We’re on track for 30% approval if the White House continues to claim that Covid has crossed the border but not for people in debt,” said a Democratic strategist involved in several midterm campaigns, se first referring to the administration trying to push back the end of the Title 42 pandemic restrictions on immigration. “Voters know when Covid is being used as a cover for political wish fulfillment.”

Despite all the insider attention on the process thus far, Mulholland argued that Biden still has an opportunity to capitalize on the overwhelming majority of voters who never tune in to Washington’s back and forth.

“What strikes the conscience of most voters,” Mulholland said, “is the decision at the end of the day, ‘Should I pay off my student loan or not? “”

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