Finance

GOP steps up attacks on canceling student debt

Republicans are attacking Democrats and President Biden on the issue of student loan debt cancellation, linking the effort to inflation and calling it a transfer of wealth to elites. 

It is an “absurd fiscal policy that will make inflation worse” and that shows Democrats have “prioritized the demands of the liberal elite” over working Americans, in the words of House Minority Leader Kevin McCarthy (R-Calif.).  

It is a “gross attack on hardworking Americans that did not attend college or saved to pay back their loans,” according to Rep. Jason Smith (R-Mo.), the ranking member on the House Budget Committee. He calls it a “bailout” to the wealthiest 20 percent of households that have “graduate degrees, six-figure incomes, and high lifetime earnings.” 

“It’s totally obscene and immoral,” in the words of Rep. Jim Banks (R-Ind.), the chairman of the conservative Republican Study Committee.  

The ramped-up rhetoric underscore the GOP’s effort to make the issue into a midterm play for working-class voters, a group that is vital to not only House and Senate elections in 2022, but to the race for the White House in 2024. 

The White House, for its part, is hoping that executive action by Biden on federal student debt cancellations will rally its base to the polls at a time when polls show Democrats are deflated with what their leaders have achieved.  That dynamic is fueling additional Republican jabs, with Rep. Virginia Foxx (R-N.C.), the ranking member on the House Education and Labor Committee, accusing Biden of trying to “buy votes and save his party from catastrophe in November” by canceling student loan debt.

Biden has come under steady pressure from liberal groups, the NAACP and Senate Majority Leader Charles Schumer (D-N.Y.), among other voices, to take action to forgive student debt. Those voices say it is critical to give relief to people carrying excess debt, particularly minority and working-class Americans.  

The reality is that many households above and below the median U.S. household income level of $67,521 hold student loan debt.  

According to a Brookings Institution analysis of 2019 data from the Federal Reserve, about 60 percent of all student debt is held by households making $74,000 or more annually, with the rest of the debt held by households under that figure. 

The Biden administration appears cognizant of the risk of the GOP attacks.  

While Schumer and other Democrats have pressed for the administration to forgive $50,000 in debt per student, Biden is believed to be looking at giving at least $10,000 in forgiveness per student, sources have told The Hill.  

Relief under that action could be limited by income level, The Washington Post reported, with the White House weighing giving relief to individual filers who earned less than $125,000 or $150,000 in the previous year, or $250,000 or $300,000 for those filing jointly. 

Sandy Baum, a nonresident senior fellow at the Urban Institute’s Center on Education Data and Policy, said broader forgiveness could disproportionately benefit higher earning borrowers, who she said are more likely to have higher debt. But she downplayed GOP arguments tying student loan debt to inflation. 

“Some people will have more to spend every month and you could argue that that has some inflationary impact. But it doesn’t seem very dramatic in the context of what’s determining inflation these days,” Baum said. 

Either way, the GOP believes its argument can be effective.  

Gunner Ramer, political director of the Republican Accountability Project, said he thinks the line of attack could be an effective tool for the GOP in rallying their base while also winning over swing voters concerned about inflation.

“There might be some of the Democratic Party that believes that student loan forgiveness is the thing that has to happen immediately. However, a much larger majority of the country is concerned about inflation,” Ramer said.

Republicans have dismissed arguments put forward by debt-cancellation advocates who say it could benefit low-income people and close racial wealth gaps for Black borrowers in particular. 

“Americans are saddled by all sorts of debt — medical, credit card, mortgage and auto. But Democrats want to forgive the only form of debt that, by definition, primarily benefits the upper class,” said Banks, the lawmaker who called cancellation “totally obscene and immoral.” 

Biden has repeatedly extended a student loan moratorium put in place during the pandemic in which borrowers do not have to make monthly payments on federal student loans that are also not collecting interest.   

Republicans upped criticism after Biden last extended the pause. Senate Republicans introduced legislation last week seeking to put an end to the Biden administration’s pauses while also limiting the president’s authority to freeze repayments in future national emergencies. 

Both sides are hoping their argument will prevail in the fall, with polls suggesting U.S. views on the issue are complicated. 

February poll of likely voters from Data for Progress found that a majority of those without a college education supported some kind of student loan forgiveness, with 65 percent supporting some or all elimination for every borrower and 69 percent supporting some or all elimination for low- and middle-income borrowers. 

Similarly, an April Politico-Morning Consult national tracking poll found that 58 percent of registered voters with no student loan debt supported some kind of student loan forgiveness, while 34 percent said that the federal government should not forgive student loan debt at all. 

Attitudes may shift, though, if Biden takes the step to officially forgive student debt and voters become more aware of the issue. 

“I don’t think it’s risen to the level that inflation, crime with the border are in terms of unifying the base against Democrats. But if [Biden] does go ahead and cancel student loans, I think it could rise in the minds of voters because it’s actually happening versus a hypothetical,” said one national GOP strategist. 

Tags Biden Charles Schumer Jason Smith Jim Banks Kevin McCarthy Virginia Foxx

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