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Make a Release

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Why is the U.S= . administration trying to cancel so many Americans’ student debts? <= strong>Ben Ritz on the policy merits and political calculations of= an unusual government initiative.

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Adam Nir

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As man= y as 43 million Americans could have their federal student-loan de= bt either reduced or forgiven entirely under a plan U.S. President Joe Bide= n announced last month. Following through on a 2020 campaign pledge, Biden = is moving to cancel up to US$10,000 in debt for individuals earning less th= an $125,000 a year and couples earning less than $250,000. He says the poli= cy will help “families who need it most—working and middle-clas= s people hit especially hard during the pandemic,” and borrowers who = received federal Pell Grants, typically given to low-income undergraduate s= tudents, will be eligible for an additional $10,000. Yet Biden’s plan= , generally lauded by progressives, drew criticism from moderates in his pa= rty, including candidates running in swing states in this fall’s midt= erm elections. Ohio’s Democratic U.S. Senate nominee Tim Ryan said, &= ldquo;Waiving debt for those already on a trajectory to financial security = sends the wrong message to millions of Ohioans without a degree working jus= t as hard to make ends meet.” Meanwhile, Republicans and right-wing g= roups are not only opposed but going so far as to look for ways to challeng= e the policy’s legality. What does the Biden administration’s d= ecision to move forward with the policy, despite these widespread reservati= ons, indicate about the administration’s political priorities? =09=09=09=09=09=09

=09=09=09=09=09=09Ben Ritz directs the Center for Funding = America’s Future at the Progressive Policy Institute, a center-left t= hink tank based in Washington. In the months and weeks leading up to the an= nouncement of broad student-loan forgiveness, Ritz urged the Biden administ= ration against it. While it would give immediate benefits to some college-e= ducated voters, notably a key Democratic Party constituency, it wouldn&rsqu= o;t do anything, Ritz says, to address the underlying drivers of rising tui= tion costs. Meanwhile, it would risk further alienating the non–colle= ge-educated voters Democrats are struggling to attract. As Ritz sees it, th= e political rationale for the administration’s move is to mobilize yo= ung, student–debt-burdened Americans to vote in a midterm-election ye= ar that’s going to be challenging for the Democrats—which, to R= itz, is emblematic of the party’s struggle to extend its appeal beyon= d its existing electoral base. It also, he thinks, illustrates something im= portant and less obvious about the administration’s approach to coali= tion politics: Where previous Democratic presidents, including Barack Obama= and Bill Clinton, made tough choices about what to prioritize and who to d= isappoint—for the sake of building broader coalitions beyond their pa= rty—Biden’s tendency has been to try to give something to every= significant constituency within his party. Two years into his term, it&rsq= uo;s a question how sustainable this political pattern will be.

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——= —

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Graham= Vyse: How does student-loan forgiveness relate to the Biden admin= istration’s broader policy agenda?

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=09=09=09=09=09=09Ben Ritz: Something this administration = has been consistent about is its desire to give something to every part of = the Democratic Party’s coalition. Where Barack Obama and other previo= us presidents set priorities—seeing themselves as having a limited am= ount of political capital and fiscal space to work with, or as needing to b= alance tradeoffs—the Biden administration has seemed to want to give = everybody in their coalition what they were looking for. There’ve bee= n voices on the left and in the center saying it would be better politics t= o do a few things well, as opposed to a bunch of things half-baked, yet the= administration has persisted in its tendency.

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=09=09=09=09=09=09Much of the agenda that it has framed as being about &ldq= uo;cutting costs” for American families is really more about “c= overing costs.” Student-debt cancellation fits perfectly with this pa= ttern. Rather than tackling the underlying drivers of skyrocketing tuition,= Biden’s plan is simply to have taxpayers pay off the debts people ta= ke out to cover college. It’s very troubling, not least for progressi= ves because this “covering costs” approach bloats the governmen= t in a way that’s corrosive to their agenda. The best way to show tha= t the government can be trusted to do more is by doing a better job of what= the government already does. That hasn’t been a priority under this = administration—at least not as much of a priority as it was for Barac= k Obama’s or Bill Clinton’s.

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=09=09=09=09=09=09Vyse: So, what was the political calcula= tion here?

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Ritz: College-educated Americans tend to be Democratic, especially in th= e age of Trump. They’re vocal on social media, work disproportionatel= y as Democratic staffers, and play an outsized role in political debate wit= hin the party. This decision on student-loan forgiveness was a concession t= o them at the expense of people Democrats traditionally claim to champion.<= /div> =09=09=09=09=09=09

=09=09=09=09=09=09It’s true that student-loan debt is top of mind for= some young voters. In general, polling shows young voters are more concern= ed about the economy and inflation than about student-debt cancelation, but= there’s no question the issue is more of a priority for them than fo= r the U.S. population as a whole. The hope is that, if you give these voter= s $10,000 months before the midterms—or, in some cases, more than $20= ,000—they’ll get excited, knock on doors for Democratic candida= tes, donate money to Democrats, and show up to vote. It’s a strategy = to energize the Democratic base.
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=09=09=09=09=09=09Vyse: Naturally, Biden and his administr= ation aren’t talking about this decision as a crass political maneuve= r, and advocates make the case for the decision on its merits. After all, s= ome beneficiaries will be Americans who took out loans but didn’t fin= ish college and get high-paying jobs—people who aren’t part of = an economic elite. The White House says “no high-income individual or= high-income household—in the top 5% of incomes—will benefit fr= om this action.” What’s the best case you’ve heard for th= is policy?
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=09=09=09=09=09=09Ritz: The best case I’ve heard for= this policy is that some Americans are burdened by student debt but lack t= he income their educations were supposed to provide, which would have allow= ed them to pay off their debt. I think there’s a very clear argument = for some form of debt relief for some people—and a very clear need to= rein in the out-of-control costs of an American college education—bu= t there’s a difference between reining in that cost and just throwing= more taxpayer money at the problem.
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Scott Webb

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More from = Ben Ritz at The Signal:

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=09=09=09=09=09=09“This policy is really three polic= ies in one: The first is a straightforward cancelation of $10,000 of debt. = The second is the cancellation of an additional $10,000 of undergraduate de= bt for borrowers who were Pell Grant recipients. [Pell Grants from the U.S.= government are typically given to undergraduates “who display except= ional financial need,” and these grants don’t usually require t= o be repayment.] Lastly, there are changes to income-driven repayment plans= going forward. The first part—the cancelation of $10,000 in debt&mda= sh;disproportionately benefits higher-income people and people who will hav= e higher incomes over the course of their lives.”

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=09=09=09=09=09=09“One of the main problems with thi= s policy is that it’s not really targeted based on financial need. Th= e administration says it is targeted, because relief is going to individual= s who made less than $125,000 in 2020 or 2021—or couples that made le= ss than $250,000—but a couple making nearly $250,000 a year has rathe= r a high income to begin with, and many people made less money during the p= andemic than they typically would have—for instance, a doctor who nor= mally makes $300,000 but got his workload cut—so these people might b= e in a better financial situation overall than their 2020 income would indi= cate. Another issue is that people who’re still in medical school or = law school—or are recent graduates—may have substantial debt ri= ght after graduation, but their degrees may significantly increase their ea= rning potential over their lifetimes. So they’ll make much more than = the average person, yet they’re still getting this debt cancelation.&= rdquo;

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=09=09=09=09=09=09“The average American has no stude= nt debt. More than four out of five American adults have no student debt. A= mong the groups of voters that Democrats have struggled to appeal to—= swing voters, white working-class voters—the median voter has no stud= ent debt. Democrats are at risk of alienating a big part of the country by = imposing costs on them and giving a benefit to the Democratic base. That al= ienation could grow, despite any initial euphoria among debt cancelation&rs= quo;s beneficiaries.”

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The Signal explores urgent quest= ions in current events around the world—to support it and for full ac= cess:

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