Democrats’ Backdoor Attempt to Cancel Student Loan Debt

Throughout the 2020 Democratic primaries, few policy ideas received more attention and support from liberal voters than so-called student debt forgiveness.

Every Democrat seeking their party’s presidential nomination—including Joe Biden—promoted some form of student loan debt relief, ranging from Biden’s $10,000 proposal to Bernie Sanders’ call for total debt cancellation.

However, President Biden and congressional Democrats have thus far refused to make debt cancellation a priority, despite its popularity among left-leaning voters.

Some might be tempted to chalk up Democrats’ decision to avoid continuing debate over the issue to the unpopularity of debt cancellation among many key voter demographics. But in fact, Democrats have found a backdoor path to student debt cancellation that bypasses debate altogether: simply refusing to make borrowers pay back their loans.

Most of the student debt amassed during the Obama and Trump administrations involves loans that came directly from the federal government. That’s the primary way college students pay for higher education today. Because the federal government controls many of these loans, it has the authority to allow students to choose not to pay the debt back. The Department of Education exercised this power in President Trump’s last year in office, as part of Trump’s COVID-19 relief plan.

Congress reinforced the Trump administration’s decision in the CARES Act, which not only temporarily froze federal student loan payments, but also reduced interest payments to zero and halted collections on defaulted loans.

Initially, student debt payments were only supposed to be stopped for 60 days, but the payment freeze has been extended each time a deadline has approached. The most recent extension occurred in January, when Joe Biden moved the deadline to September 30.

Most Americans with federal student loans, even if they didn’t lose their jobs or otherwise suffer severe economic consequences from the pandemic, have not been required to make a federal student loan payment in more than a year. And now, Democrats are suggesting the deadline should be delayed again, this time to 2022.

On Wednesday, more than 60 congressional Democrats, including Senate Majority Leader Chuck Schumer (N.Y.), sent a letter asking President Biden to continue the debt payment freeze for at least another six months beyond the September deadline—if not much, much longer.

“We ask that you extend the pause by at least six months—until March 31, 2022—or until the economy reaches pre-pandemic employment levels, whichever is longer,” the letter says.

The phrase “whichever is longer” is an immensely important part of the congressional Democrats’ request. With the economy still limping after more than a year of COVID-19 lockdowns, it is impossible to say when employment will reach “pre-pandemic” levels.

The seasonally adjusted unemployment rate in January and February 2020, just before the pandemic began, was 3.5 percent—as low as any unemployment rate the Bureau of Labor Statistics has recorded since 1969. It could be decades before the unemployment rate returns to “pre-pandemic” levels, and the labor force participation rate might never fully recover.

Calls for further student debt freezes are not limited to the halls of Congress, either. Earlier in June, Education Secretary Miguel Cardona indicated during a Senate committee hearing that the Biden administration is considering whether to issue yet another payment freeze extension.

It is not hard to see how these allegedly temporary cessations of student loan payments could become permanent. The longer holders of student debt are not required to pay it back, the more politically difficult it will be for the Biden administration or a future Congress to restart the payments, which, for some borrowers, amounts to more than $1,000 per month.

Cancelling student loan debt in the midst of a national debt crisis and a period of rapid inflation is bad enough on its own, but doing so without the consent of the American people—who will, one way or another, be forced to pay the costs—would be both reckless and deeply immoral.

If taxpayers are going to be forced to foot the bill for the college debt incurred by others, the least the government can do is require Congress to vote on the matter. Sadly, that seems increasingly unlikely to occur.

Justin Haskins is a research fellow at The Heartland Institute and the director of Heartland’s Stopping Socialism Project.

The views expressed in this article are the writer’s own.