‘Student Loan Socialism’ – Republicans Criticize Biden’s Debt Forgiveness Move, While Democrats Praise His ‘Effective Action’

‘Student Loan Socialism’ – Republicans Criticize Biden’s Debt Forgiveness Move, While Democrats Praise His ‘Effective Action’

President Joe Biden on Wednesday made his long-awaited announcement on federal student loans, saying his administration plans to cancel $10,000 in debt per borrower for individuals earning less than $125,000 a year or families earning less than $125,000 a year. $250,000.

With the November midterm elections looming, he also announced forgiveness of up to $20,000 per borrower for Pell Grant recipients, along with a final pause on loan payments.

Below are some initial reactions from Republican and Democratic analysts and lawmakers.

To see: Biden canceling $10,000 of student loan debt, $20,000 for Pell grants, per borrower

He was: Canceling student debt hardly holds up in court, says ex-Education Department lawyer

Republicans, former Obama aide and others criticize Biden’s move

• “President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid off their debt, and every American who chose a certain career or volunteered to serve in our Armed Forces to avoid taking on debt. This policy is surprisingly unfair.” — Senate Minority Leader Mitch McConnell, Republican of Kentucky, in a statement

• “The thing is, we’ve just passed a very big law and very difficult to pass, the Inflation Reduction Law, which will achieve some deficit reduction, both in the short term and … in the long term – very, very important given the huge national debt that we have – and we will do so in a way that takes us in the right direction against inflation. Because immediate debt reduction, or reducing our deficits, will help deal with the inflation problem we have and make it easier for the Fed to fight it. Now it looks like with a stroke of the pen today, the president will erase all those gains. And indeed, the cost of what I think is being discussed will outweigh all the savings of this legislation that took a full year to negotiate and was not easy to pass.” — Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, a nonpartisan watchdog organization, in a Yahoo Finance Interview

• “Aside from making inflation worse, the student debt transfer does nothing to reduce runaway costs in higher education, including graduate schools that charge more and more and deliver less and less. Forgiveness without liability is a free pass for failed programs with high costs and poor outcomes and would be a green light for colleges to continue with tuition increases. In fact, taxpayers could face more costs in just a few years when student debt returns to its current level.” — House Minority Leader Kevin McCarthy, Republican of California, in a statement

Analysts no longer see forgiveness, pain for some companies

• “That … is likely how far this administration will cancel student loan debt. Republicans are already criticizing Biden for spending $300 billion to subsidize what the GOP describes as wealthier debtors. This is a populist backlash against higher education spending aimed at working-class voters without a college degree.” — Jaret Seiberg, analyst at the Cowen Washington Research Group, in a note

• “Student loan forgiveness can result in pressure from student loan service fees for managers such as Nelnet (NNI,
-1.18%
). It could also reduce student loan refinancing for companies like Navient ( NAVI,
+0.25%
) and SoFi Technologies (SOFI,
+4.54%
). Politically, canceling some student debt would fulfill another campaign promise for the president. In our opinion, the ‘win’ could still face criticism from the left who feel it’s not enough, from the right who feel the amount disproportionately helps wealthier students, and from the right and middle who may feel stocks can increase inflation. . In addition, President Biden may face further criticism that forgiving student debt does not solve the crisis, but is a temporary cure-all.” — Benjamin Salisbury, research director at Height Capital Markets, in a note

Democratic lawmakers and progressive group praise

• “The positive impacts of this move will be felt by families across the country, particularly in minority communities, and it is the most effective action the president can take on his own to help working families and the economy. This action, along with pausing payments, interest and collections on federal student loans, will improve the economic security of borrowers, allowing them to invest in their families, save for emergencies and pay off other debt.” — Senate Majority Leader Chuck Schumer, Democrat of New York, and Senator Elizabeth Warren, Democrat of Massachusetts, in a joint statement

• “After all. President Biden’s bold and urgent action on student debt begins to restore a promise we made to generations of Americans that investing in education is their ladder to opportunity. … This was a bold step. take the next one and really tackle the runaway costs in higher education. We must increase funding for the Pell Grant program, hold colleges accountable for poor results, and make broader reforms to the student loan system.” —Patrick Gaspard, president and CEO of the Center for American Progress, a liberal think tank

• “The president’s action today will change lives for the better. By reducing this unfair debt burden, this decision will help millions of people survive, build generational wealth, grow their families, buy homes and more.” — Democratic Representative Ayanna Pressley of Massachusetts

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