With sagging poll numbers and midterm elections a little over five months away, senior Democrats have pressed President Biden to wipe away huge amounts of student debt — in the neighborhood of $50,000 per person — which, they argue, the law allows the president to do with a wave of his hand. Mr. Biden has properly resisted such a giveaway, which would lavish federal aid on many wealthy college graduates who do not need the help.
Biden can still avoid offering wasteful student debt forgiveness
Until, perhaps, now. After months of uncertainty, The Post’s Tyler Pager, Danielle Douglas-Gabriel and Jeff Stein reported that Mr. Biden is poised to announce a student debt plan that is not as spectacularly bad as the ideas some other Democrats have pushed. But that is not much of a distinction; the president’s apparent plan would still be an expensive and inequitable election-year stunt.
Mr. Biden’s reported policy, which he had hoped to announce last week, would forgive $10,000 in student debt per person. Erasing $10,000 rather than $50,000 per borrower would be a nod toward those who point out that eliminating large amounts of student debt would cost the government huge sums of money — money that would be spent in ways that Congress did not intend when lawmakers created the federal student loan program. Mr. Biden’s plan would also limit debt forgiveness to individuals earning less than $150,000 per year or couples earning less than $300,000, heading off criticism that government money would be delivered to rich, well-educated people.
These provisions, while welcome, would not stop the policy from becoming yet another taxpayer-funded subsidy for the upper middle class. The president’s means test would be almost useless, as some 97 percent of borrowers would still qualify for forgiveness. The Committee for a Responsible Federal Budget, a nonpartisan watchdog, estimates that such a plan would cost at least $230 billion, that 71 percent of the benefits would flow to those in the top half of the income scale — and that a quarter of the benefits would go to the top 20 percent. Even this does not express fully how regressive the policy would be, because many recent graduates from medical, law and business schools would qualify for forgiveness even though their lifetime income trajectories don’t justify it.
Rough estimates suggest that a third of borrowers would see their balances disappear, and an additional 20 percent of student debtors would see their balances at least halved. Doing so, it must be said, would help some genuinely needy people. Low-income borrowers who have relatively small amounts of debt yet still struggle to make their payments could see their balances eliminated or substantially reduced. The aid could be life-changing for some former students toiling under the weight of default, since student loan debt generally cannot be discharged in bankruptcy.
But Mr. Biden could ease the burden on the truly disadvantaged in a variety of more targeted ways — and avoid setting a precedent of broad loan forgiveness that future presidents will be pressured to match. Administration officials stressed that Mr. Biden has not made a final decision and that his goal is to aid the neediest. Good. He still has time to change course.