Opinion: Why Biden needs Congress to really fix student loan debt

This week, President Joe Biden unveiled a student loan forgiveness plan that will be fully enacted under executive powers. While the $10,000 loan forgiveness (plus an additional $10,000 for Pell Grant recipients) has grabbed headlines, other aspects will have potentially life-changing benefits for borrowers.

These include capping the maximum amount in an income-based payment plan at 5% of monthly discretionary income and stopping interest when people don’t miss payments. The latter is a huge game-changer since usurious interest rates have locked many borrowers into a never-ending cycle of increasing debt.

However, that is a far cry from the full undergraduate debt cancellation that Biden promised during the campaign trail. It has many people on the left furious that Biden made only a token gesture on an issue very important to his base. I’ve lost count of the number of people on Twitter who are (wrongly) convinced that the President could just wipe out all debts tomorrow with a single signature. The implication is that since he didn’t, he doesn’t take the matter seriously.

As usual, nothing is as simple as a tweet makes it seem. Biden may have solved one side of the problem with presidential power, but the other will require Congress. More than that will require 60 members of the Senate as the matter is too far removed from a budget reconciliation to be approved for this process.

Let’s say for a second that Biden wiped out all student debt next week by executive order. All. Only. Drop. Millions of Americans are free from their payments. Huzah!

What’s happening next semester?

People are enrolled in school right now. Millions of children graduate from high school every year and start enrolling in colleges and universities. These courses will have tuition fees, and these tuition fees will have to be paid. Does the lending process continue, we just eliminate all debt every generation after everyone has paid into the system due to an uncertain future? What does the FASFA (Free Application for Federal Student Aid) system look like for the next batch of students?

These are questions that need to be answered alongside student debt reform. The Conservatives are right when they say that mass forgiveness will change the way people go into debt to pay for their education. A bizarre system where people are scammed and reprimanded for payments for 20 years before the whole thing is dropped in a shifting political move is a very American solution, but that doesn’t make it a good one.

Biden may have solved the interest problem, but as president there is nothing he can do to rein in the price of state college tuition. The cost of tuition rose from $10,231 per year in 1980 to $28,775 in 2019, an increase of 180%. At the University of Houston, tuition fees have increased by 33.83% over the last ten years. Since 1980, the salaries of university graduates only increased by 15.9%, which means that each generation had to pay more of their salary to pay for their studies. Forgiving debt without tackling spiraling tuition fees is like trying to mend a cut that needs stitching with a bandage. It’s better than nothing, but it won’t work forever.

Biden’s Build Back Better plan would have made community college free for everyone in America. This would have greatly reduced the total cost of an education. The College for All Act currently languishing in the House and Senate would eliminate public school tuition for anyone earning less than $125,000 a year. The bill would be paid by a tax on stock and bond transactions. Or, we could build a federal university system it doesn’t require state money as suggested by Freddie DeBoer, an institution that can be used to drive down prices like Medicare does with drugs.

Naturally, Republican opposition to these ideas will be high. The inevitable challenge from states like Texas if such a bill passes is certain to make its way to the Supreme Court, where the future is indeed very dicey these days. It’s understandable to be frustrated with these roadblocks and want Biden to wield power like a king to fix it.

It won’t happen, and it shouldn’t happen. Consistently handing over power to the president without congressional oversight hasn’t taken the country to good places. Legislation will ultimately be needed to move forward. This is something we should all keep in mind as we approach the halfway point.

About Michael S. Montanez

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