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Biden’s Impossible Student Loan Dilemma

Getting things right on federal student loan forgiveness could be nearly impossible for Joe Biden. He will anger millions no matter what he does.

Written By: Michael P. Lux, Esq.

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Affiliate Disclosure and Integrity Pledge

As a student loan borrower who runs a website for student loan borrowers, I’m sometimes guilty of looking at issues from a borrower-centric perspective.

That said, empathy is an essential element in advocacy. If you want to change someone’s mind, it helps to understand their perspective.

Borrowers have a long — and justified — list of expectations from Joe Biden. For decades, the needs of colleges and lenders have been put ahead of students and borrowers.

To advocate for borrower-friendly policies, it’s worthwhile to look at things from Biden’s perspective. How can we make helping student loan borrowers the most logical option?

Biden’s Track Record on Student Loans

I’ve been a vocal critic of Biden, but I think it is fair to say that he has done more for borrowers than any other sitting president. Admittedly, that is a pretty low bar, but some of the policy changes have made a considerable difference for borrowers.

The biggest help for most has been the continued payment and interest freeze. Other pandemic relief programs ended long ago. However, the student loan pause continues to this day. This time has been a significant lifeline to borrowers.

Another major development was the limited waiver on Public Service Loan Forgiveness. Biden took a deeply flawed program with an unreasonably high rejection rate and fixed most of the significant issues. PSLF now looks like a program that actually delivers on the government’s promise to public servants.

Biden has forgiven billions of dollars for borrowers deceived by their colleges, and he has helped correct payment records for borrowers misled by their loan servicers.

Despite the major progress in less than two years in office, most borrowers expect more. The fixes are helpful, but many would argue it is too little, too late.

Threading the Needle on Student Loan Forgiveness

The reporting out of the White House suggests that Biden is struggling to make up his mind on student loan forgiveness.

He has four options for loan forgiveness:

  1. No forgiveness
  2. Forgive 10k for all borrowers
  3. Forgive 50k for all borrowers
  4. Cancel all federal student debt

Americans have strong feelings about each option. Some find any cancellation to be unacceptable. Millions of borrowers have balances of less than 10k. Others see only forgiving 10k as a slap in the face.

No matter what decision Biden makes, he is going to upset millions.

Additional Complications: Even if Biden decides on a number for forgiveness, major logistical issues exist.

If he cancels 10k for everyone, some high earners will benefit. If he puts an income cap on forgiveness, many experts warn of a potential train wreck that would cause many eligible borrowers to miss out on the relief.

Why Biden Can’t Win

Biden can’t get a win on student loan forgiveness because the student loan crisis is a symptom of a larger issue: the cost of college.

For decades the price of a college education has grown significantly faster than inflation during the same time period. However, attending college is still a valuable step to increasing earning potential. This combination has made college a dangerous, high-risk, high-reward situation.

No matter what decision Biden makes on forgiveness, the cost of college issues will remain. Prices keep increasing, and students borrow more money to pay for school.

Even the President of the United States cannot fix these issues alone.

Biden’s best path forward might be pointing the finger at Congress and/or asking for help.

Getting Congress Involved

Biden could blame Congress for the student loan crisis.

Legislation may be the only way to rein in the price of college, and Congress isn’t even discussing the issue.

State schools were once a great option for an excellent affordable education. Today, most students require substantial borrowing to afford a public school.

Congress can make public colleges more affordable. Congress has the ability to rein in for-profit schools that take advantage of both students and taxpayers. They haven’t meaningfully addressed either issue.

Until Congress steps up and fixes the root problem, Biden will have to use his authority to help borrowers caught up in a broken system.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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