During the 2020 election, student loan forgiveness was one of the key issues that President Biden built his campaign on. It’s also one of the promises many people burdened with student debt expected President Biden to push for after he won the election. However, a year later the Democratic party has made little progress towards this goal. Instead, they extended the moratorium on student loan repayment an additional 90 days. This is a far cry from what his supporters had hoped for. It’s merely a continuation of the relief measures initiated by the Trump administration when the pandemic began. Although it is disappointing to those drowning in debt, here are 5 reasons why Biden opted for a student loan freeze over forgiveness.
Biden’s Promise for Student Loan Forgiveness
Based on data collected over the last two years, Americans hold $1.57 trillion dollars in student loan debt. Meanwhile, the average person owes $38,792. As the economic pressures persisted, the federal government enacted the CARES Act. The objective was to offer financial relief by suspending payments, freezing interest, and stopping collection efforts on government-held student loans.
This extension affects nearly 41 million people, 27 million who have not been making monthly payments since the beginning of 2020. However, many Democratic leaders feel it isn’t enough. They are now pressuring him to deliver on his promise to seek $10,000 of debt forgiveness for those holding federal student loans. While his bill passed in the House, it still sits in the Republican-controlled Senate with little bipartisan support. But instead of pursuing this piece of legislation, Biden has once again approved the extension of the student loan freeze to prevent interest accrual.
When he approved the first extension under his administration back in August, he claimed it would only be delayed “one final time”. However, he has now extended the moratorium a second time, postponing the deadline until May 1. Furthermore, both President Biden and the Secretary of Education Miguel A. Cardona have told people to prepare to resume payments. This doesn’t bode well for those still holding on to the hope of student loan forgiveness.
5 Reasons Why Biden Opted for a Student Loan Freeze over Forgiveness
Although it doesn’t address his campaign promise, here are 5 reasons why President Biden opted for a student loan freeze over forgiveness.
1. It’s easier to extend the freeze than gain enough support to pass new legislation.
Student loan forgiveness is still a contentious issue. While everyone can agree the system is flawed, no one can agree on how to fix it. Some Democrats don’t think the bill for student loan forgiveness goes far enough. On the other hand, moderates and conservatives feel it is too expensive.
However, both sides of the aisle have already agreed to the moratorium for student loan repayment under the Trump administration. The truth is that it’s easier to get Congress to agree to another extension on something they’ve already passed rather than pursue the controversial bill.
2. It guarantees continued relief, even if it’s only temporary.
Another reason the Biden administration extended the student loan freeze over forgiveness is that it guarantees a temporary relief. Even if Biden is unable to fulfill his promise, it gives people a few months reprieve during economic uncertainty.
This action allows people to continue to keep their heads above water, even if the legislation is never brought to a vote in the Senate. Some may argue that a few more months won’t make much difference. Many more would disagree. It may allow people to gain a better financial footing. They can pay off other debts or focus on paying down the principal on their student loans before the moratorium expires.
3. His social spending plan is in danger.
In addition to the difficulties President Biden faces in passing the student loan forgiveness bill in the Senate, it also threatens support for his social spending plan. Some politicians who are willing to cross the aisle for other aspects of his proposed measures may withdraw their support if he pushes too hard for student loan forgiveness. So, an extension of the student loan freeze protects his plan. It’s an easy way to appease both parties without putting his other legislation in danger.
4. Biden is taking more targeted measures for student loan forgiveness.
Others believe that he opted for the student loan freeze over forgiveness since he plans to take a more targeted approach. The theory is that Biden will enact debt relief through executive action since it wasn’t included in the initial stimulus plan. Furthermore, separate legislation would allow lawmakers to take broader actions towards student loan forgiveness.
Furthermore, there have already been a few reforms that wiped out $13 billion of student loan debt for more the 640,000 people. This includes legislation that has already forgiven $7 billion for those with “total and permanent disability” and relief to those defrauded by schools. However, many Americans are waiting for additional measures that are more inclusive.
5. He is afraid the relief will go to people at elite colleges.
Biden has evaded questions when pressed by the progressives in his party to enact sweeping student loan forgiveness. But when specifically asked why he opted to extend the moratorium again, he stated concern that relief would go to people attending elite universities and colleges. This seems like a weak response made up on the spot. Sadly, $10,000 of debt relief would hardly make a dent in the total tuition costs of ivy league institutions. It’s a flimsy excuse as he tries to buy more time and avoid criticism from both parties.
Will There Ever Be Student Loan Forgiveness?
No one has a crystal ball. It’s impossible to give a definitive answer if there will ever be complete forgiveness of student loans. While it would provide an economic stimulus, everything comes with a cost.
However, the Biden administration says it is conducting a legal review of the possibility of enacting student debt cancellation through executive action. The review is still underway. So, this extension could give Biden the time he needs to complete it. There may still be hope for those holding on to this campaign promise.