Biden sells his student loan forgiveness plan, calls it economically responsible
President Biden on Wednesday attempted to sell his student loan forgiveness plan and pushed back on criticism over the policy, arguing that it’s economically responsible and will be paid for.
“I believe my plan is responsible and fair. It focuses the benefit on middle class and working families. It helps both current and future borrowers, and it will fix a badly broken system,” Biden said in remarks.
Biden unveiled a plan earlier on Wednesday to forgive up to $10,000 in federal student loan debt for borrowers making less than $125,000 annually and $20,000 in loans for Pell Grant recipients within the same income bracket.
The president will also extend a payment freeze on federal student loans and interest accrual until Dec. 31 and stressed that January will finally mark the end of the years-long student loan payment freeze.
“By resuming student loan payments at the same time as we provide targeted relief, we’re taking an economically responsible course. As a consequence, about $50 billion a year will start coming back into the treasury because the resumption of debt,” Biden said.
He acknowledged that critics will argue it is too much, a claim that largely comes from Republicans and moderate Democrats, or too little, which largely comes from progressives and activists.
“There’s plenty of deficit reduction to pay for the programs many times over,” Biden said, arguing that his administration has cut the deficit enough to pay for the policies.
The White House on Wednesday said that if borrowers have undergraduate loans, they can cap repayment at 5 percent of their monthly income. Current students with loans are also eligible for this debt relief, and dependent students will be eligible for relief based on their parents’ income.
When asked if the newly unveiled plan is unfair to people who have paid back their student loans, Biden shot back and asked, “Is it fair to people who in fact do not own multibillion-dollar businesses to see one of these guys get the tax breaks? Is that fair? What do you think?”
Earlier in his remarks, Biden had bashed Republicans for being critical of forgiving student loan debt, but for voting for Trump-era tax cuts.
“I will never apologize for helping working Americans in the middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations, that slowed [the] economy, didn’t do a whole lot for economic growth,” he said.
“I find it interesting how some of my Republican friends who voted for those tax cuts and others think that we shouldn’t be helping these folks,” he added, referring to borrowers.
Republicans have strongly come out against proposals for student debt relief and denounced them as unfair and inflationary.
Biden compared his plan to the $700 billion in small business loans given out during the pandemic, arguing that there weren’t complaints at the time that those loans caused inflation.
“No one complained that those loans caused inflation. A lot of these folks in small business are working- and middle-class families. They needed help. It was the right thing to do. So, the outrage over helping working people with student loans I think is just simply wrong. Dead wrong,” he said.
Ninety percent of eligible beneficiaries of the plan make under $75,000, more than 60 percent are Pell Grant recipients, and 45 percent will have their debt fully canceled, according to data from the president. He also noted that it will help Black and Hispanic borrowers who are disproportionately impacted by student loans.
“No high-income individual or high-income household … will benefit from this action. Period,” he said, adding that he is honoring a commitment made during the campaign to forgive $10,000 in outstanding loans.
During the 2020 campaign, Biden supported forgiving at least $10,000 in federal student loans per person but progressives and fellow Democrats have long pushed him to support forgiving up to $50,000 in loans.
The Department of Education also announced on Wednesday that it is making changes to the Public Service Loan Forgiveness program, which allows borrowers working in public service to make progress towards their loans. It will retroactively credit public service, allow more payments to qualify for the program and allow various deferments and forbearances, such as for those in the Peace Corps.
Biden said the program has driven him crazy because it needs to be fixed, calling it “a mess,” and “inefficient and complicated.”
Additionally, the department will propose a rule to hold career programs accountable through measures such as publishing an annual “watch list” for those with the worst debt levels.
Biden hailed the plan for holding colleges accountable for jacking up their costs, while also criticizing former President Trump. Biden had announced in June that he would cancel billions in student debt for former Corinthian College students and earlier this month announced he would discharge billions in student debt for ITT Tech borrowers.
“We’ve all heard of those schools luring students with a promise of big paychecks when they graduate, only to watch these students being ripped off and left with mounds of debt,” Biden said. “My predecessor looked the other way for some reason … to do anything about this fraud. My administration’s taking it on.”