We’ve made it pretty clear across a number of posts now, in case it wasn’t obvious from their absence over the past several months, that federal stimulus checks are a thing of the past. Such benefits are now a local phenomenon, and really come down to the luck of where a person happens to live. President Biden, nevertheless, has telegraphed that his sights are set once again on a huge federal stimulus effort — this time, though, in the form of student loan forgiveness.
According to sources with knowledge of the president’s thinking who spoke to Bloomberg, Biden is leaning toward using executive action to forgive at least $10,000 in student loan debt per borrower. This is partly because he feels like Congress has left him no choice. Which is something we’ll go into below in more detail.
Who would benefit from student loan forgiveness?
First of all, though, in terms of who would benefit from any student loan forgiveness? The biggest beneficiaries would, of course, be borrowers with the biggest outstanding balances. There are reports that the average amount of such debt is more than $40,000. One criticism of this, however, is that forgiveness would be a boon to people who are a bit more well-off.
Think about people who rack up the biggest student loan balances. Doctors, lawyers, and the like.
Anonymous sources have cautioned that the president’s thinking here is still fluid. But there is chatter that there would be some sort of means-testing in whatever final form of a plan emerges. The Washington Post reported in recent days, for example, that one thought is the president would limit relief to individual borrowers who made less than $125,000-$150,000 in 2021. And that the president might set the limit at no more than $300,000 for joint filers.
But if you read that and wonder why someone who makes $300,000 a year can’t afford to repay their student loans? Our answer would be — that’s a very good question.
Already, meanwhile, everyone is sort of dividing themselves up along the familiar partisan lines regarding any potential student loan forgiveness.
The AOC wing of the Democratic party, for example, insists Biden isn’t thinking big enough here. Republicans, meanwhile, think that efforts such as these risk making an already bad inflation problem even worse. All this comes, by the way, as the votes have dried up in Congress for new federal stimulus checks. While inflation and gas prices, among other things, are soaring right now.
Nevertheless, what Biden is leaning towards here potentially represents a much bigger stimulus effort than the US has seen in months. At least in terms of the total dollar amount. According to the nonprofit Committee for a Responsible Federal Budget, as noted by Business Insider, if Biden erased $10,000 in student loan debt for every borrower? The total would amount to around $245 billion.
As noted, nothing here is set in stone yet. Biden has said he’ll have more concrete details to share in a few weeks.