President Joe Biden’s announcement that the U.S. government will forgive up to $20,000 in student loan debt for millions of Americans was met with reaction that fell across familiar partisan lines, creating yet another battlefront for the midterm elections.
Democrats and left-leaning organizations applauded the decision, even if many also said they want the White House to do even more to address ballooning educational debt. U.S. Sen. Raphael Warnock, who made the issue a key pillar of his work in Washington, got a preview of the plan directly from Biden on Tuesday evening.
Warnock said Wednesday that there is reason to celebrate but also more work to be done.
“This announcement will help many Georgians, some of whom have been struggling with debt for decades, get their financial footing, and it will help keep our economy strong and growing,” the Atlanta Democrat said in a statement.
But he added that even once Biden’s plan goes into effect, many Georgians will still be saddled by student debt while others rack up new loans.
“So I’m going to keep fighting for additional student relief for all Georgians left struggling with student debt and to prevent future borrowers from carrying that same burden,” Warnock said. “That means addressing the underlying problem by making college more affordable and creating opportunities for Georgians looking to enter the workforce through job training and other programs that prepare workers for growing fields.”
His opponent in November, Republican Herschel Walker, echoed criticism from other conservatives that the plan will drive up inflation.
“This will do nothing to make college more affordable, will cost our country billions of dollars, and leave hard-working Georgians to foot the bill,” his campaign wrote on social media.
Biden’s plan calls for wiping $10,000 in educational debt off the books for people making less than $125,000 a year. The amount doubles to $20,000 for people who were eligible for Pell Grants at the time of their schooling. Biden also plans to cap payments to 5% of discretionary income, reduced from the current 10%, and remaining loan balances for certain borrowers will be forgiven after 10 years of repayment instead of 20. The pause on loan repayments begun during the coronavirus pandemic will be extended one last time to the end of the year.
Jeffrey Lazarus, a professor of political science at Georgia State University, said he thought the impact of the plan on the upcoming elections would be negligible.
“We get caught up in the news cycle du jour, but policy decisions like this tend not to play a huge role in the midterms, or elections generally,” Lazarus said.
He noted that polls show public opinion on student debt relief is mixed.
Republicans oppose the move as too costly and irresponsible while young liberal voters, who have been pushing for the debt cancellation, don’t think it goes far enough, Lazarus said.
If the GOP retakes control of the U.S. House as expected after the midterms, conservatives could take steps to reverse the new debt forgiveness policies. More immediately, critical groups could also launch legal challenges of the president’s ability to cancel debt without congressional approval.
U.S. Rep. Barry Loudermilk, a Cassville Republican, put out a statement calling the plan out of touch with the priorities of most Americans.
“President Biden’s student loan debt forgiveness scheme is an insult to the millions of hardworking Americans who have worked so hard to pay off their student loans and other debts,” Loudermilk said. “Not only does this decision raise legal concerns, it will also not help inflation and will cost American taxpayers an estimated $300 billion.”
Economists say the plan overall is likely to have little impact on the federal deficit or inflation because the impact of the loan forgiveness, about $321 billion, is relatively small relative to the overall economy, roughly $21 trillion a year.
Usha Rackliffe, an accounting professor at Emory University who previously served as the chief financial officer for the University System of Georgia’s Board of Regents, said loan forgiveness allows people to redirect the money to other priorities such as purchasing a home or paying down credit cards.
Rackliffe characterized Biden’s announcement as a good thing, saying many students take out loans without understanding how interest will affect their payments over the long term, leading to middle-age Americans with large balances and no end in sight.
“With this kind of forgiveness, it shines the light on the problem,” Rackliffe said. “It provides an immediate fix.”