Biden was skeptical of student loan relief. After months of pressure, he gave up.

Author: Yuvi August 27, 2022  Biden was skeptical of student loan relief.  After months of pressure, he gave up.

WASHINGTON – New York President Biden and Senator Chuck Schumer, the majority leader, board Air Force One after visiting the families of 10 people killed at a supermarket in Buffalo on May 17. Emotions from the mass shooting were raw, but Mr. Schumer also had something else on his mind.

Sitting alone with the president in his private cabin, the Senate’s top Democrat spent most of the 58-minute flight in Washington and urged Biden to pay off hundreds of billions of dollars in student loans for the federal government. It was a promise the president had made as a candidate, Schumer argued, and it would help millions of low- and middle-income Americans.

Mr Biden will prove to be a tough sell.

The President had been agonizing over this decision for months. A month after taking office at a CNN town hall, he flatly refused to forgive $50,000 in student loans, like Mr. Schumer, that was too costly and could be seen as unfair to those in need. who paid his debts. He said, ‘I won’t let that happen. He even seemed dissatisfied that canceling the loan was a good idea, suggesting that it “might benefit the people who go to Harvard and Yale and Penn.”

During the flight in May, Mr. Schumer continued, according to an account of the discussion provided this week.

Over lunch, he appealed to the president’s sentiments, describing a young woman who brought tears to his eyes, saying the crushing burden of her loan payments made it difficult to live. The senator also tried to allay the president’s fears that erasing some of the debt would be a boon to rich white students, saying that “the vast majority are poor people and people of color.”

On Wednesday, Mr Biden agreed, announcing that he would wipe out significant amounts of student loans for millions of Americans. With less than three months until the midterm election, which will determine who controls Congress, Mr. Biden succumbed to months of lobbying and his own deep reservations, and those of his allies, about policy and the president. Overcame the political implications of a massive exercise of power.

The key to convincing the president, aides said: making sure that debt relief will target a lot of funding for low-income and minority students.

He signed on to a plan that went even further than some of his closest associates expected—a $10,000 debt cancellation for those earning less than $125,000 per year and a $10,000 Pell grant for low-income students. 20,000. Their plan also reduces payments for all federal student borrowers for years to come.

“Some people think it’s too much,” Biden said when he announced his decision, drawing outrage from Republicans and some Democrats. “Some people think it is too small. But I believe my plan is responsible and fair. It focuses benefits on middle class and working families, it helps both current and future borrowers, and It will fix a badly broken system.”

With the midterm election looming, here is President Biden standing.

The long-delayed move has drawn sharp criticism from Republicans, who describe it as a costly gift to many who do not deserve it, with families earning up to $250,000 a year. It has also ignited an intense debate about the economic consequences, with Treasury Secretary Lawrence H. Summers warned it would “contribute to inflation” and Obama’s economic adviser Jason Furman called it “reckless”. “The idea that would add half a trillion dollars of gasoline” to an already burning inflationary fire.

Some outside economists, including analysts at the White House and Goldman Sachs, say the debt relief will have almost no impact on inflation as it begins with the resumption of loan payments for all borrowers after a nearly three-year pause for the pandemic. will match.

Mr Biden’s deliberations on the issue of student loans underscore his reluctance to fully embrace the progressive agenda of his Democratic rivals during the 2020 presidential elections. But they also revealed his desire to change his mind and his desire to be seen as an advocate of the middle class.

As he finished making the announcement on Wednesday, Mr Biden was asked by a reporter if it was fair to those who had already paid off their student loans.

“Is it fair to people who don’t really have a multi-billion dollar business if they see that one of these people gives them all a tax break?” Mr Biden, referring to the 2017 Republican tax cut, said, “Is it fair?”

Janet L. Yellen, the Treasury secretary and former Federal Reserve chairman, was one of the main skeptics in Biden’s inner circle of top advisers.

She, like others, worried that the economic impact of a giant giveaway could be profound, especially as the Federal Reserve struggled to keep inflation at bay, according to several officials. His message was echoed by top Democratic economists, who inundated the White House with concerns about the potential impacts.

Mr Biden began listening to the concerns of some of his economic advisers as early as the spring of 2021. What some saw as an essential item has been repeatedly delayed as Mr Biden considered alternatives.

On December 15, the White House hosted a call with student loan forgiveness advocates, but delivered a message activists didn’t want to hear: The president had still decided not to cancel any student loans. In fact, as the economy was reversing, borrowers needed to prepare for the end of the moratorium on payments, which had been extended regularly since the pandemic began.

At senior staff meetings this spring, as Mr Biden continued to deliberate, advisers made different proposals. White House Chief of Staff Ron Klein argued that canceling student loans could increase support from young voters, many of whom had become disenchanted with the administration.

What we consider before using anonymous sources. How do sources know the information? What is his inspiration for telling us? Have they been proven reliable in the past? Can we confirm the information? Even when these questions are satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.

Others, such as Mike Donilon, one of the president’s closest political advisers, showed Mr Biden polling data indicating support was divided among Americans for the cancellation. He told the president that whatever its impact on those in debt, the move could isolate older Americans who saved money to pay tuition for themselves or their children. The plan can be seen as unfair.

According to people familiar with his thinking, those who expressed concern were feeding off the president’s own uncertainty.

People close to him said that the first lady was also uncomfortable. A college professor, Jill Biden has been vocal about her husband’s call for free community college. But she did not publicly support forgiving student loans.

The debate continued, slowly, throughout the summer. Mr Biden’s senior aides will gather for a meeting to discuss the issue, only to be asked to return again by the president, with more data on who would benefit from the apology.

“You’re not going to be able to go out there and tell him anything,” said Cedric Richmond, a former senior adviser to Mr Biden. “You have to do an analysis, some evidence.”

At the West Wing, Vice President Kamala Harris was one of the most consistent promoters of student loan cancellations.

An administration official said that during Valentine’s Day week, Ms. Harris drafted a memo to her staff members listing the president’s concerns, as well as talks aimed at addressing them one-by-one. On her concern that loan cancellations would benefit “private elite schools,” she recommended in the memo that she counters it by saying that “only 0.3 percent of federal loan borrowers attended Ivy League schools.” In response to his concern that the loan should be forgiven by an act of Congress, the memorandum urged him to state that the same executive authority was already being used to enforce loan payment breaks.

When the president met in April with members of the Congressional Hispanic Caucus, who were eager for the president to cancel more than $10,000 in debt, it was clear he still hadn’t made up his mind.

Should debt relief be implemented on borrowers of both public and private colleges? He asked. It was a sign to some attendees that Mr Biden was grappling with how much debt to forgive and who should benefit.

The lobbying effort continued throughout the summer.

At the White House in May, Schumer and Senators Elizabeth Warren, a Democrat from Massachusetts, and Raphael Warnock, a Democrat from Georgia, presented data to Biden showing that loan cancellations would benefit borrowers who failed to obtain degrees, According to a person familiar with the meeting.

The three senators were among the most ardent supporters of student loan cancellation. Ms. Warren made this a central issue in her presidential bid. Mr. Warnock and Mr. Schumer both backed the more than $10,000 in relief promised by Mr. Biden during the campaign. (Ms. Warren also used Air Force One as a lobbying site, bowing to Mr. Biden’s ears during the presidential flight to a wind farm in Massachusetts.)

The data the trio gave Mr Biden during their May meeting was aimed at countering one of their hangups: the notion that loan cancellation would be a gift to the privileged.

When it became clear that Mr Biden was unwilling to wipe out more than $10,000 of debt for all borrowers, lawmakers switched gears, lobbying instead for the president, who had a Pell grant, a program that was already targeted at low-income students. ,

Outside factions continued to beat up the President as well. Ten days after the president’s flight from Buffalo with Mr Schumer, NAACP President Derrick Johnson delivered a clear message to Mr Biden in a tweet.

“Canceling $10,000 in student loan debt is like pouring a bucket of ice water on a wildfire,” he wrote.

In recent weeks, as it became clear Mr Biden was close to a decision, advocates intensified their efforts. Senators Schumer, Warren and Warnock spoke with Klein and Brian Deez, the president’s top economic advisers, on Friday. Mr. Schumer called on the president on Tuesday. Mr Johnson called senior White House officials on Monday and again on Wednesday morning, hours before the announcement.

For so long to come and such a deep debate, it seemed unusually hasty after Mr Biden made his choice.

The announcement comes before the Department of Education will fully design how the program will work, and before White House economists can estimate its full cost. The lack of a revenue estimate forced administration officials into a tortuous effort to explain how the plan would be “paid for in full”, as Mr Biden has insisted for all of his proposals.

Executives at loan servicing companies began to hear whispers from their friends at the Education Department on Wednesday morning that a decision was coming. Within minutes of the president’s remarks on Wednesday afternoon, the website began to crash. Many loan service companies have telephone hold times of up to an hour.

“Everyone is calling us, but we don’t have answers,” said an official.

Late Thursday, the White House press secretary, Karine Jean-Pierre, said the program would cost $24 billion a year if 75 percent of those eligible request cancellation. On Friday, Bharat Ramamurthy, deputy director of the National Economic Council, said more accurate estimates would not come for weeks, at least.

Stacy Cowley contributed reporting from New York.

Author: Yuvi

My name is Yuvi, I work as Sub Editor at

27 August, 2022, 4:51 am

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