Editorial rips Biden’s plan to extend payment break
A new editorial from Washington Post tears up the latest extension of President Joe Biden’s student loan payment break.
Here’s what you need to know.
Student loan borrowers may be pushing for more student loan relief, but not everyone is happy with Biden’s policy decision to extend the student loan payment pause until August 31, 2022. In a scathing op-ed released Friday, Washington Post The editorial board wrote the following:
- “extending the pause on student loan repayments makes no sense”;
- the onset of the pandemic two years ago was a national emergency that warranted student loan relief, but today it is unwarranted;
- university graduates are not in trouble now;
- the unemployment rate for Americans with a bachelor’s degree or higher is 2%;
- the unemployment rate for Americans with “some university” is 3% (compared to 15% in April 2020); and
- “there is an almost record number of job vacancies.”
(Student loan payment break: 5 questions)
Pause in student loan payments hurts Americans who need financial support the most
According to the editorial board, the student loan payment suspension disproportionately benefits high-income earners, such as student borrowers with medical or law degrees. Why? The student loan debt crisis is traditionally portrayed as impacting student borrowers who have attended college. However, almost 50% of all student loan debt comes from high school. These student borrowers earn on average a higher income than college and high school graduates. About 64% of Americans do not have a college degree. (Biden is still considering large-scale student loan cancellation). This means that Biden’s student loan relief is not benefiting these Americans. The editorial board notes that “it would be much more equitable and efficient to give discounts to low- and middle-income households.” (Biden could extend the student loan payment break indefinitely.)
The Committee for a Responsible Federal Budget notes that the latest extension of the student loan payment pause will cost $20 billion. As the Washington Post note, this is almost equal to the annual budget of the Pell Grant program – which helps students with exceptional financial needs to pay for their college education. In his latest budget proposal, Biden proposed doubling the Pell Grants, a proposal that might have paid for absent government spending for the student loan payment break. (The new proposal would extend the student loan payment break and cancel student loans).
“Regardless of the view on student debt relief, this approach is regressive, uncertainty-creating, untargeted and inappropriate at a time when the economy is overheating,” the former Treasury secretary said. American Lawrence Summers. tweeted. Summers, a Democrat, served as president of Harvard University and in the Clinton and Obama administrations. (Student loan cancellation and student loan payment suspension are confusing. Here’s what to know).
Why Biden extended the student loan payment break
Why did Biden extend the student loan payment break? According to the editorial board: it is a question of policy. The midterm election is November 8, 2022. To galvanize the Democratic base, the argument goes, Biden extended student loan relief to 41 million student borrowers. Without an extension, progressive Democrats such as Rep. Alexandria Ocasio-Cortez (D-NY) have argued that extending the student loan payment pause is essential for Democrats to retain control of Congress. (Senator: Cancel all student loans). She also argues that Biden must follow through on large-scale student loan cancellations before the midterm elections. (Here’s who won’t qualify for $6.2 billion in student loan forgiveness). While the Editorial Board does not dispute that higher inflation is causing financial stress, the Editorial Board says the economy is much healthier today compared to the start of the Covid-19 pandemic. If help should be delivered, the Washington Post argues it should be directed to Americans who need it most.
Currently, student loan repayments are expected to resume beginning September 1, 2022. Are you ready? Make sure you know all of your student loan repayment options. Here are some smart money-saving options: