Joe Biden’s student loan plan is misleading and not very good.
Media is badly misreporting, overselling his tricky agenda
If mainstream media reports on Joe Biden’s student loan plan are to believed, one would think that Biden is being extremely generous to the 55 million student loan borrowers and cosigners in the country. According to reports that have gone viral in recent weeks, Biden is promising to eliminate the loans of people who went to public colleges, and earn less than $125,000 per year. He is also pledging to cancel $10,000 for all borrowers, across the board. Further he is reportedly pledging to return bankruptcy protections to all student loans. If these claims were true, it would be important news to these voters, more than 75% of whom were never going to be able to repay their loans even before the pandemic hit, and who are surely losing sleep over the debt.
The problem, however, is that they aren’t true. Careful examination of Biden campaign white papers reveal that the actual plans he has proposed are not what is being claimed by the media, are essentially impossible to make happen, politically, and even if successfully passed, would never work.
First, Biden is not pledging to eliminate the loans of all public college students who earn less than $125,000 per year. In April, Biden published an aspirational article in which he said he was “developing” a plan to forgive loans for public college students who earn less than $125,000 , but this would have only been for undergraduate students, and only for tuition-related expenses. Not only is this loan cancellation only a small fraction of people’s loans- and for far fewer people than the media would have us believe- this proposal was never actually included in Biden’s official position platform. If Biden had been serious, it surely would be in there by this late date. In all likelihood, his quip about eliminating student debt referred to his pledge to implement debt-free college for future students, not people already saddled with loans.
Biden is, actually, pledging to cancel $10,000 in student loan debt for all borrowers, as outlined by Elizabeth Warren. But the reality is that none of Biden’s cancellation plans are even remotely likely to happen. All of Bidens plans require Congress to raise money to “pay for” the loan cancellation. The $10,000 pledge, alone, would require $440 Billion, and the undergraduate pledge would likely require roughly the same amount. Compelling Congress to pass such legislation simply would not happen. When the democrats held a super-majority in Congress in 2008, they were unable, even, to return bankruptcy protections to student loans. To think that they will now happily raise Trillions in taxes in order to pay for this loan cancellation is beyond unlikely. It is a pipe-dream.
Perhaps most importantly: whatever loan cancellation plan Congress might pass would have many strings attached, and the Department of Education, which cannot stand cancelling loans and finds ways to disqualify 99% of the people who try for cancellation programs already in place, would again be put in charge of this program. They would surely bureaucratize it to death.
Interestingly, the President could cancel loans without Congress. By executive order, the President can cancel 85% of all student debt without needing any congressional appropriation, and without adding to the national debt. The taxpayers paid for these loans many years ago, and really shouldn’t need to pay twice (actually far more than twice with accrued interest,fees, etc.). This is clearly the most efficient, effective, and expedient way to cancel loans and stimulate the economy. Biden knows this, but is- tellingly- silent on the matter.
On bankruptcy, Biden said that he would adopt Elizabeth Warren’s plan, and indeed his campaign has dutifully copied and pasted Warren’s bullet points on this topic. Again, however, careful examination of the language in his position paper on this topic reveals that the Biden people, cleverly (if not sneakily) pasted only the part of Warren’s plan that relate to private student loans, not federal loans, which comprise over 90% of all student debt. “Swamp Progressives” have tried this sleight of hand in the past, and here it is again.
The clinching “tell” on bankruptcy: Elizabeth Warren pledged that on day one, she would issue an executive order directing the Department of Education (and presumably its contractors) to stop opposing student loan borrowers in bankruptcy court. Biden has very obviously not made this pledge, which could only pertain to federal loans. So Biden is not serious about returning bankruptcy to federal loans, and would only be for private loans if Congress brought him a bill to sign, which has proven an impossibility for well over a decade running.
It is worth mentioning here also that Biden is one of the key senators who championed the removal of bankruptcy protections from private loans in the first place as a part of the bankruptcy bill of 2005. The banks promised that if Congress made the loans non-dischargeable, they would lend to more needy students. After Biden and Congress did what they asked, however, not only did they NOT start lending to more needy students, they began demanding credit-worthy cosigners for over 90% of their new loans. This has put mom and dad’s, grandma and grandpa’s real assets on the chopping block, and has destroyed hundreds of thousands, if not millions of families. This is certainly one of the cruelest tricks ever played on the American people by the student loan industry, and we have Biden to thank for it.
The Department of Education, which books obscene profits on these loans, fights hard behind the scenes to keep bankruptcy gone, and which has no desire or intentions of actually cancelling any loans should love Biden’s plan.
The 44 million distressed student loan voters would not, if they knew the truth about it.
It may well be too late. The media has almost certainly badly misled these voters (most of whom identify as being independent or republican). Barring a dramatic October Surprise from President Trump- like canceling all federal student loans by executive order- this unprecedented voter bonanza will almost certainly go to Biden. This turns a difficult election into an impossible one for the President.
If you care about this, you should contact the Biden campaign, and tell them to make the pledge to return bankruptcy protections to student loans by executive order. You should also sign and share this petition broadly.
Update:
After this article was written, Biden’s campaign did, actually commit in writing to cancelling all tuition related student loan debt for undergrads who had gone to public colleges and HBCU’s, and who earned less than $125,000/year. Here is a screenshot:
