Biden, Democrats Use Student Loan Forgiveness as Political Tool

The amount of outstanding student loan debt in the United States is staggering. There are approximately 44.7 million borrowers who owe over $1.7 trillion. And every semester, more is being added to the balance sheet.

According to CNBC in 2019, “About one in four Americans has student loan debt, with the average balance just over $37,000. The average student loan payment is $393 a month.” Many Americans were already struggling to pay their student debts, but the onset of the Covid-19 pandemic and ensuing financial collapse compelled the Trump Administration to suspend interest and payments due by those holding federal student loans.

Under Joe Biden, this freeze continues, and the call to cancel debt altogether has been getting center stage in the Left’s domestic program.

But for one pundit, while Trump’s initial freeze “for better or worse” was meant to mitigate financial fallout during the early days of pandemic uncertainty in 2020, Biden’s extension of this policy may also be politically motivated to keep key allies appeased. The controversy revolves around the Public Service Loan Forgiveness Program (PSLF).

In a piece for The Hill, titled “How Biden’s Student Loan Policies are Rigged in Favor of Government and Nonprofit Workers,” opinion contributor Justin Haskins, notes that “Under PSLF, borrowers enrolled in income-based repayment plans who make payments for 10 years while working for a local, state or federal agency (including public school teachers) receive total debt forgiveness of their federal student loans.”

Under these current repayment freezes, borrowers are currently receiving repayment credit every month, whether they make a payment or not. And the benefits of this program also extend to those working for non-profits.

There is no limit to the amount of debt which can be cancelled, and if repayment remains frozen beyond the current October 2021 benchmark, there may soon be significant numbers of borrowers working for the federal government and non-profit organizations being released from their debts despite not being required to pay anything for a year and a half, or perhaps years into the future.

Why then, Haskins asks, does Biden continue to halt payments for workers who did not in fact lose employment in the public sector?

“The only explanation that makes sense is that the Biden administration is trying to keep government workers and Biden’s allies in nonprofits (including think tanks) happy, regardless of the costs imposed on others.”

Forgiven loans do not just vanish into thin air. It is money lost by the American taxpayer. But on the campaign trail, Biden, like many of the left, used student loan forgiveness as a bargaining chip with the electorate.

As noted by Business Insider, “During his campaign, Biden promised to immediately cancel $10,000 in student debt per person. In a speech on November 16, Biden said that student loans are holding borrowers up, and forgiving $10,000 in student debt ‘should be done immediately.’”

This pledge has yet to materialize into any meaningful action, but this did not stop supporters from taking him up on it.

The Biden Jubilee 100 is a collective of debtors who have gone on “strike” against their debt, hoping to start a movement to force Biden’s hand on his campaign trail rhetoric regarding student loan forgiveness.

“We’re going to win what we organize for,” co-founder, Thomas Gokey, told CNBC.

And powerful Democrats like Senators Liz Warren & Chuck Schumer would also like to see Biden do more, calling for up to $50,000 in loan forgiveness under the guise of social justice.

With the trajectory of the current pandemic situation, it is not a stretch to imagine that a pause on payments for federal student debt may go on well beyond the current expiration date in October. In fact, it is de-facto forgiveness by default if it were to continue indefinitely.

Whether it is an ongoing freeze or outright cancellation, it is the American taxpayer who will be put on the hook for the debt that private citizens have taken out on their own. A trillion-dollar debt bubble is not one that can just be popped without consequence, but Democrats under Biden are now using it to solidify a future voter base through government handout.

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

Image Credit: Photo by Element5 Digital on Unsplash

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