Was Biden’s Decision Not to Forgive Student Loans Good for Borrowers?

Michael Lux Analysis, Student Loan Blog 0 Comments

I hated hearing Joe Biden say that it was unlikely he would forgive student loans via an executive order.

I’m trying to convince myself that this decision was for the best.

Staying positive about this decision is a struggle.

Biden is Providing Consistent Predictable Leadership

While I was disappointed to hear that Biden wouldn’t even attempt to use the power of the presidency to erase student debt, it wasn’t a surprise. It was an outcome predicted months ago.

Being a predictable leader is a good thing. People don’t want to be surprised, especially when it comes to their finances.

Biden could have let borrowers cling to hope that he would agree with the other Democrats advocating for $50,000 of loan forgiveness. He didn’t. Good leadership is telling people the truth rather than telling them what they want to hear.

Even if he is going about the decision in the right way, it doesn’t make it a good choice.

Avoiding a Student Loan Forgiveness Executive Order Prevents Chaos

Had Biden listened to the calls to cancel student debt with a stroke of his pen, there would have been chaos and confusion.

As Biden noted when he said he was unlikely to use an executive order, this is an open legal question.

An executive order forgiving any student loans would face many legal challenges. The process could take months or even years.

Imagine a scenario where Biden forgives $50,000 of student loans, and then the courts prevent the move. It would be a mess. Borrowers might buy a house or a car because they thought they were free of their student loans. If the debt suddenly returns, it would cause major financial hardship.

Wouldn’t I rather face a little potential chaos if the reward is $50,000 of debt disappearing?

Student Loan Help is on the Way

Biden is sticking to his word by not trying to use an executive order to forgive student loans.

He campaigned as a unifier and someone who wouldn’t push the authority of the presidency. An executive order canceling federal student loans would be stretching the power of the president.

In the case of executive orders, sticking to his word is arguably bad for borrowers.

However, sticking to his word would also mean help for student loan borrowers. As a candidate, Biden promised a student loan plan that would cut most IDR payments in half. Creating a new repayment plan is within the scope of his authority. No help is needed from Congress.

Biden also promised to fix the Public Service Loan Forgiveness Program. This fix would include balance reductions for public servants for each of their first five years in public service. Getting people to act in year one, rather than waiting ten years, could help avoid the current PSLF confusion that we now face.

Lower payments would be great, but wouldn’t cancellation be better?

Have I Convinced Myself That the Decision to Skip the Fight on Forgiveness was a Good Idea?

I’m still not convinced that student loan forgiveness through executive order isn’t a fight worth having.

As a student loan borrower, I know I’m biassed on this issue. However, I also know that debt cancellation would be a huge boost to the economy, not just student loan borrowers.

Ultimately, I think I respect the approach and the thought behind it, but I would rather he reached a different conclusion.

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