WASHINGTON — Democrats cheered President Joe Biden’s move to cancel $10,000 in federal student loans for millions of borrowers, saying he’s now fulfilled a key campaign promise to help Americans struggling to pay for college and saddled with debt.
Republicans immediately slammed Biden’s actions, which come a little more than two months before the crucial midterm elections. They argued that erasing the debt represents a government giveaway to the rich, is "unfair" to those who already paid off their loans or taxpayers who never went to college, and that more spending will exacerbate record inflation.
"An awful lot of Americans choose not to go to college. And then there are those Americans who borrowed money to pay for school and paid it back. In what way is it fair to those taxpayers?" Senate Minority Leader Mitch McConnell told reporters Wednesday in Kentucky.
"So I think fundamentally when we borrow money, we pay it back. And I don’t think the government ought to be forgiving."
Roughly 45 million Americans have student debt, totaling more than $1.7 trillion in the second quarter of 2022, the Federal Reserve estimated. People with smaller amounts of debt often have a harder time paying it off because they might not have completed their degree or have degrees with lower earning power compared to those with more debt.
Republicans have pointed out that the median household income for those making payments on student loans is $76,400; just 7% of those households are below the poverty line.
South Carolina Sen. Tim Scott, often mentioned as a possible 2024 GOP candidate, dismissed Biden’s plan as a “handout to the wealthy. Period,” while another potential 2024 GOP hopeful, Arkansas Sen. Tom Cotton, blasted it as a “bailout.” A third, Florida Sen. Marco Rubio, called the plan an “unfair burden to place on working families.”
“Forgiving student loan debt isn’t free,” Rubio said. “It means the 85 percent of Americans with no undergraduate debt from college will be carrying the burden for those that do.”
But Biden's plan is popular among Americans. The NBC News poll from March and May found that 46% of voters said they would more likely back a candidate who wanted to cancel some student-loan debt, versus 33% who would be less likely to support that candidate. Still, the issue is not as popular as others like support for abortion rights or clean energy; it ranked in the middle of pack among the 25 issues that voters were asked about.
Under the plan, Biden is canceling $10,000 in federal student loans for borrowers who earn less than $125,000 a year; couples who file taxes jointly and earn less than $250,000 also will be eligible for debt cancelation. And Pell Grant recipients, those from low-income families, will be eligible for an additional $10,000 in debt relief, for a total of $20,000.
Biden came armed with his own stats. Standing with Education Secretary Miguel Cardona in the White House, the president said roughly 43 million Americans would be eligible for relief, 60% of whom are Pell Grant recipients. And nearly 90% of relief dollars will go to those who make less than $75,000 a year, he said.
“All this means people can start [to] finally crawl out from under that mountain of debt … on top of their rent and utilities,” Biden said, “to finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off.”
Biden is also extending the payment pause on federal student loans for a “final time” through Dec. 31. The moratorium on payments started under the Trump administration due to the pandemic and was extended multiple times by the Biden administration. The latest extension was set to expire on Aug. 31.
Progressives had been pushing Biden to get more aggressive and cancel as much as $50,000 in student loan debt. But on Wednesday, they took a victory lap, saying more could be done later.
“Make no mistake: This is one of the biggest acts of consumer debt relief in American history, and it will directly help hard-working people who borrowed money to go to school because they didn’t come from a family that could write a big check,” tweeted Sen. Elizabeth Warren, D-Mass., who along with Majority Leader Chuck Schumer, had personally pressed Biden to take action on student loans.
“Today is a win — and it paves the way for even more victories to come, if we keep fighting side by side.”
NAACP President Derrick Johnson, who had also pushed the Biden administration, praised the actions as well, saying that people who attended Historically Black Colleges and Universities would see a direct benefit.
“Americans across the country, including millions of HBCU attendees, will benefit from this decision. Our continued focus remains on closing the racial wealth gap and we will continue to press for scaled solutions,” Johnson said.
Still, the support among Democrats was not unanimous. Rep. Chris Pappas, D-N.H., who’s facing a tough re-election bid this fall, distanced himself from Biden and said a better approach would be to draft legislation that expands Pell Grants, community college and loan forgiveness for those studying “vital professions like nursing.”
“This announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities,” Pappas said.
Republicans, including Rubio, Cotton and Rep. Virginia Foxx of North Carolina, agreed that Congress — not the president — needs to fix the student debt crisis and have proposed their own bills, though none go far enough for Democrats, who control both the House and Senate. In fact, the Republican National Committee tweeted out a video of Speaker Nancy Pelosi from last year asserting that Biden "does not" have the power to unilaterally cancel student debt.
"He can postpone. He can delay. But he does not have that power," she told reporters in July 2021. "That has to be an act of Congress."
Foxx’s bill, the Responsible Education Assistance through Loan Reforms Act, would provide targeted relief to borrowers who made years of loan payments and allows Pell Grants to be used for short-term, career-focused programs, among other things.
“It’s time for President Biden to put down the executive pen and fix the mess he and his party created," said Foxx, the top Republican on the Education and Labor Committee.
Rep. Jason Smith, the top Republican on the Budget Committee, told NBC News that Biden's announcement was a "political stunt."
"Today's actions make clear that President Biden is more interested in pushing his party's political agenda than easing the pain of working Americans," he said.