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Joe Biden’s Student Loan Plan Is a Very Bad Sign

Just how many means can we possibly test to help the fewest amount of people?

Bumper sticker that says University of Student Loans
Flickr/Bryan Alexander

Back in September, Senate Minority Leader Chuck Schumer and Senator Elizabeth Warren proposed a plan to immediately eliminate $50,000 of student debt for every American by executive order, something they and other legal experts were certain Joe Biden could accomplish in his first few days as president.

This was a revelatory plan. An immediate erasure of $50,000 of debt from the hurting coffers of a generation of Americans would be an almost unprecedented economic stimulus. Of course, it doesn’t go nearly far enough: the average student loan debt for the class of 2019 is $30,062, but in specialized fields like medicine and law it’s not uncommon to see debt in six figures.

Still, a $50,000 number was a promising start, one of the few slim signs of hope young people have had that the incoming administration may improve their quality of life in some measurable way. But in the two weeks and change since the 2020 election, Schumer and Warren’s plan has gone through a giant game of telephone between Democratic leadership and the Biden administration, coming out on the other side as an unrecognizable, pitiful mess.

Biden’s original plan for student loan debt fell fall short of the Schumer-Warren plan: $10,000 in debt relief for every year of community or national service someone performed. This is a pittance, of course, compared to a unilateral $50,000 reprieve. But it’s still a far sight better than the endpoint we’ve come to now. From NPR, emphasis mine:

In answer to a question at a Monday press conference, Biden repeated his support for a provision passed as part of the HEROES Act, which the Democratic-controlled House updated on Oct. 1. The provision calls for the federal government to pay off up to $10,000 in private, nonfederal student loans for “economically distressed” borrowers. Biden specifically highlighted “people … having to make choices between paying their student loan and paying the rent,” and said the debt relief “should be done immediately.”

To be completely fair, this provision doesn’t preclude Biden from also doing his $10 grand per year of service thing. But the fact that this is our starting point — some means-tested half-plan to give some people a little bit of debt relief right away — does not exactly bode well for the future of higher education and income inequality in the country. Back to NPR:

And Biden coupled his endorsement of debt cancellation with the idea of lowering the cost of college through more federal aid going forward, “everything from community college, straight through to doubling Pell Grants, to making sure that we have access to free education for anyone [from households] making under $125,000 for four years of college,” he said.

Pell Grants. Hooray. Fuck yes. When I say “Pell Grants” you say “WHOOOOOO!” When I say “PELL GRANTS,” you say “WHOOOOOOO!!!”

What’s particularly telling about the HEROES Act provision (which was already exhaustively means-tested by Nancy Pelosi’s do-nothing brigade), is that it uses federal money to pay off debt from private loans. So the loan companies don’t actually lose any money, and students who got federal loans, rather than private ones, still have to pay the government back. To me, that’s a sign that the administration wants very little to do with disrupting the actual problem in the country: predatory lending companies (including the federal government) that lend desperate students tens of thousands of dollars at an average 5.8 percent interest rate, knowing it will take years and years for them to pay it back. That’s a system that will not, largely, be disrupted by a short-term injection of federal cash.

Nobody was expecting Joe Biden to govern very boldly, but this is still a signal of just how little we can probably expect from his government when it comes to solving some of the core economic problems that are crushing millions and millions of people right now. The Democrats are making the same bargain they’ve made so many times before: give people the bare minimum they can to keep their heads above water, while leaving the systems trying to drown them every day intact to keep pushing them back under.