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Biden’s Debt Relief – The New York Times


Fewer than 40 percent of Americans graduate from four-year colleges, and these college graduates perform much better than students without degrees on a variety of measures. University graduates earn more Medium; less likely to suffer unemployment; more likely to get married; healthier; live longer; and show off greater satisfaction with their lives. These gaps have generally increased in recent decades.

As a result, many economists have expressed skepticism about the idea of ​​universal student loans. It’s like tax cuts are mainly for the wealthy: Americans who attend and graduate from college tend to come from the top half of the income distribution and tend to stay there later in life. . College graduates are also disproportionately white and Asian.

“Educational Debt”, as Sandy Baum and Victoria Lee was written for the Urban Institute, “disproportionately concentrated among the well-off.”

But the idea of ​​loan forgiveness has yet to be implemented on the political left. As Democrats increasingly become the party of college graduates living in expensive metropolitan areas – and as college costs continue to rise, while income growth for millennials grows . disappointed – loan forgiveness has obvious appeal.

These confrontations have put President Biden and his aides in a dilemma. Biden describes himself as a working-class Democrat. (He’s the first party presidential candidate without an Ivy League degree since Walter Mondale.) He didn’t initially campaign for a sweeping college debt relief plan, only adding it to the agenda. his campaign after he defeated more liberal candidates in the primaries, given his approach to their supporters.

Yesterday, after months of behind-the-scenes work and internal debate, Biden Finally Announces Debt Relief Plan. And it was an attempt to find a middle ground.

By definition, the plan won’t help many Americans who don’t go to college. However, its benefits are aimed at lower-income college graduates and dropouts, especially those who grew up in lower-income families. Compared to other potential debt relief plans, Biden’s version is much more focused on lower- and middle-income households.

It is restricted to individuals earning less than $125,000 (or households earning less than $250,000), which would exclude those with very high incomes at law firms, in Silicon Valley. and other places. For anyone below this income threshold, the plan will write off debt up to $10,000. For some people who received Pell Grants while in college — a federal program focused on lower-income families — the program can spare an additional $10,000.

More broadly, Biden also said he wants to enact a new rule to limit future payments on college loans to no more than 5% of borrowers’ discretionary income, down from 10%. to 15% today.

(My colleagues Ron Lieber and Tara Siegel Bernard wrote a Q. and A. it’s full of useful information about the plan.)

The emphasis on Biden’s plan partly reflects academic research that has found that those who have the most trouble paying their loans don’t match the common perception. They are less likely to become bartenders with six figures of debt and graduate degrees than blue-collar workers with less outstanding loans but not yet graduating from college. Yesterday, Biden said that worker was “the worst of both worlds – in debt and without a degree.”

One research by Judith Scott-Clayton of Columbia University found that the default rate for borrowers without any degree is 40%. For those with a bachelor’s degree, the figure is less than 8%.

The details of Biden’s plan mean it targets those most likely to default, rather than a caricature of them. “$10k will forgive ALL debts of millions of borrowers,” tweeted Susan Dynarski, a Harvard University economist — and a first-generation college graduate herself. on yesterday. As an example, she cites “people who went to community college for a semester or two.”

There is still some uncertainty about whether the plan will go through. Biden is passing it through action because it appears to lack the support to pass it in Congress and opponents could challenge it in court.

Robert Kelchen of the University of Tennessee predicted: “Let the lawsuits begin before the president’s authority. “I won’t believe forgiveness is going to happen for a while, and it could be moved to the Supreme Court.”

“Thoughtful people disagree on student loan forgiveness,” Arindrajit Dube, an economist at the University of Massachusetts, Amherst, wrote on Twitter. He hailed the plan as a form of “disaster relief” addressing the struggles of young workers in the more than decade since the Great Recession began.

Matthew Chingos of the Urban Institute has noted that the income cap increases the write-off rate for Black borrowers.

Susan Dynarski told me she was “liked” with the plan but hoped people wouldn’t need to ask for forgiveness, as some wouldn’t. The government has the data it needs for automatic debt cancellation, she said.

Progressive groups mostly support the plan. Indivisible called it a “bold step to improve the lives of working people”.

Mitch McConnellRepublican Senate leader, said: “Biden’s student loan socialism is a slap in the face to every family that has sacrificed to save for college, every graduate to pay off debt. and every American who has chosen a certain career path or volunteered to serve in the Armed Forces to avoid debt. “

Democrats in competitive elections have had mixed reactions. Senator Raphael Warnock Georgia calls for more debt relief. Representative Tim Ryanrunning for an Ohio Senate seat, criticized the plan: “Instead of forgiving student loans for six-figure earners, we should work to level the playing field for all people.” America”.

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Thank you for spending part of the morning with The Times. See you tomorrow. – David

Latest PS”Presentation of the New York Times“On Hulu, about an influential doctor who spread Covid misinformation.

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