Democrats say that student loan forgiveness can help win votes this November, but their plan may backfire.
Here’s what you need to know — and what it means for your student loans.
President Joe Biden is considering wide-scale student loan forgiveness for millions of student loan borrowers. Biden has canceled $17 billion of student loans since becoming president, and he has focused on targeted student loan cancellation for specific student loan borrowers. While Biden has supported $10,000 of student loan forgiveness, he has declined to use executive authority to enact wide-scale student loan cancellation. Now, as the midterm election is months away, Biden could seek to forgive student loans for a core constituency of Democratic voters. Let’s explore.
Student loan relief: pressure from Democrats
Progressive Democrats in Congress have led a multi-year campaign to cancel student loans for millions of student loan borrowers. For example, Sen. Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) have proposed up to $50,000 of student loan forgiveness. Sen. Bernie Sanders (I-VT) has called for student loan cancellation of all $1.7 trillion of student loans. Like their Senate counterparts, Rep. Alexandria Ocasio-Cortez (D-NY) and Rep. Ayanna Pressley (D-MA) have called on the president to use executive power to cancel student loans. All have argued that student loan cancellation will stimulate the economy, reduce disparities, and provide a fresh start on their student loans for millions of Americans. More recently, progressives have pressured the president to act now to help Democrats retain control of Congress. Why?
Student loan forgiveness: driven by the midterm election?
Progressive Democrats in Congress have warned the president that the failure to cancel student loans now could hurt Democrats in the upcoming election. Without student loan cancellation, they say potential Democratic voters could choose not to vote or vote for alternative candidates. To energize the Democratic base, the argument goes, Biden should cancel student loans now in advance of the election. Republicans in Congress, most of whom oppose wide-scale student loan forgiveness, have expressed outrage at this strategy. Republicans say that wide-scale student loan cancellation is a terrible idea that constitutes wealth redistribution, and they balk at the notion of canceling student loans in exchange for potential votes. (Bill Maher: Student loan forgiveness is a “loser” issue).
Student loan forgiveness could backfire
If progressive Democrats are correct, then canceling student loans now could reap benefits such as Democrats retaining control of Congress. (Student loan cancellation could mean the end of student loan relief). However, moderate Democrats aren’t so sure. While wide-scale student loan cancellation could energize part of the Democratic base, it’s also possible that moderate and independent voters disagree with this potential policy decision. Given the 50-50 split in the U.S. Senate, moderate and independent voters will play an increasingly important role in this election. Student loan cancellation is considered a progressive position, not a moderate one. Many moderate Democrats in Congress wouldn’t vote for any wide-scale student loan cancellation. Their constituents could follow suit by voting for Republicans in the fall. With high inflation and gas prices, coupled with a struggling stock market, the economy will play a central role in the election. This alone doesn’t mean Biden should forgo student loan cancellation. However, if Biden is considering the political implications, any perception that student loan cancellation hurts the economy could hurt Democrats’ election prospects.
There’s no guarantee that Biden will cancel student loans for all or most student loan borrowers, or at all. Rather than broad student loan forgiveness, Biden could continue to focus on targeted student loan cancellation through existing federal programs. Most importantly, you should evaluate your unique financial situation and act accordingly to pay off student loans. Here are some popular ways to get out of student loan debt faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)