Biden plans student debt relief announcement Wednesday

President Biden intends to announce his long-delayed decision to forgive some student debt on Wednesday. Biden has yet to finalize the details of his plan, but any decision he makes on the contentious issue is likely to draw criticism from both parties and risk turning the political tide that has recently begun to blow in Democrats’ favor.

Biden is returning from a two-week vacation on Wednesday and preparations are underway for a White House event to announce his decision, according to a person familiar with the matter. Aides expect the president to land somewhere nearby to forgive borrowers making less than $125,000 a year up to $10,000 in federal student loan debt, the person said. More than 40 million Americans earning less than $125,000 have at least some college debt.

Biden had vowed to act before Aug. 31, when the recent pandemic-related moratorium on federal student loan payments expires. He is also considering whether to extend this pause in loan payments and interest again. President Trump first suspended payments in March 2020, and Biden has granted four extensions. So far, the lockdowns have cost the federal government more than $100 billion. More than 40 million Americans owe a total of $1.6 trillion in federal student loans.

A struggle over student loans could slow the Democrats’ recent momentum and threaten the cohesion of their coalition. The President and his party have seen poll numbers surge in recent months, fueled by a series of events that have shifted the political landscape in their favour. The Supreme Court decision in late June overturning Roe v. Wade alienated women across political lines. The high-profile hearings, which further shed light on Trump’s key role in instigating the Jan. 6, 2021 Capitol riot, received widespread television coverage and hardened the perception of Republicans as the more extreme party. And the Democrats’ passage of three major bills — a climate overhaul, prescription drugs and taxes, new funds to boost domestic microchip manufacturing, and improved health care for veterans exposed to toxic chemicals on the battlefield — has shown the public that Biden is far from done -Nothing President.

Before the abortion decision, the Jan. 6 hearings, and the barrage of new legislation, some senior Biden advisers believed that substantial student-loan debt relief was one of the few measures that could upset the Democratic base and help the party weather a tough election cycle . Despite public and private pressure from Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), and Raphael Warnock (D-Ga.), Biden has long questioned whether debt relief of up to $50,000 could be granted dollars would be wise.

Now that the President is about to announce a smaller loan write-off, he risks dissatisfying all parties. Key Democratic constituencies, including young voters, Black Americans, and civil rights groups like the National Assn. for the Advancement of Colored People, have been pushing hard for more forgiveness and may be disappointed. Republicans, meanwhile, will have a new line of attack.

Derrick Johnson, the president of the NAACP, attacked Biden in a statement Tuesday, saying that if reports from the president, who agreed to $10,000 in debt relief, are accurate, “we have a problem.” . The decision, he continued, would continue an historic trend in federal government policy that harms black people.

“Tragically, we’ve seen this happen so many times,” Johnson said. “The interstate highway system has devastated black communities. Social reform left poor black people behind. The Senate’s failure to pass the George Floyd Justice in Policing Act failed to save Black lives. President Biden’s decision on college debt cannot become the latest example of policies that have left blacks — especially black women — behind. That’s not how you treat the 90% of black voters who turned up in record numbers to save democracy again in 2020.”

Biden faces a difficult balancing act as he attempts to please key Democratic constituencies who want him to do more. But his centrist instincts and the political risk of unilaterally spending billions of taxpayer dollars during a period of record inflation are holding him back.

Lawrence Summers and Jason Furman, prominent economists who have served in previous Democratic administrations, have publicly warned Biden not to go too far with student loan forgiveness, which Summers tweeted Monday “is spending that increases demand and increases inflation. It consumes resources that could be better used to help those who, for whatever reason, haven’t had the chance to go to college. It will also tend to be inflationary by increasing tuition.”

Though some Democrats call Biden’s plans inadequate, Republicans are eager to criticize any forgiveness. The Republican National Committee on Tuesday pointed to a new website with a litany of talking points arguing that debt relief is a taxpayer-funded “handle” that would benefit the rich and hurt the middle class, while exacerbating inflation.

Much of the GOP’s data comes from analysis by the Committee on Federal Budget Responsibility, a Washington-based think tank opposed to student loan debt relief. According to the organization, it would cost $20 billion to extend the current moratorium on repayments through the end of the year; and canceling $10,000 in student debt for households earning less than $300,000 would cost taxpayers about $230 billion.

Those moves, the organization said, would “undo nearly 10 years of deficit reduction from the Inflation Reduction Act” and “boost near-term inflation far more than the IRA will bring down.”

The left-leaning Roosevelt Institute disputes these conclusions, pointing out that the Committee on Budgetary Governance’s analysis is biased. Black borrowers are particularly likely to benefit from loan forgiveness because a disproportionate number of them, compared to whites, are forced to borrow to meet the cost of higher education. It concludes that “student debt relief will increase the wealth of millions of Americans who need it most and promote racial justice — all without increasing inflation.” Biden plans student debt relief announcement Wednesday

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