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Four things to know about Biden’s student-debt relief plan

Loan forgiveness got the biggest attention. But the changes to repayment rules may have as big an effect.

- September 2, 2022

Last month, President Biden fulfilled a campaign promise when he announced a sweeping executive action to cancel significant amounts of student loan debt for millions of Americans.

While many supported Biden’s move, Republicans — and even some Democrats — have been vocally opposed. But our research suggests that the program could prove popular among Democratic voters, potentially boosting Democratic candidates at the ballot box.

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A three-part plan

Student loan debt is the fastest-growing type of nonmortgage debt in the United States, with about 46 million Americans owing more than $1.6 trillion in federal student loans. This debt has been tied to delays in marriage, homeownership and having children, as well as the worsening racial wealth gap. Biden’s student-debt relief plan has three major prongs to alleviate the problem.

The first prong has gotten a lot of attention: The Department of Education will cancel $10,000 for borrowers making under $125,000 per year (or $250,000 for married couples) and up to $20,000 for Pell Grant recipients, who come from low-income families. Together, this cancellation could erase student debt for 20 million borrowers and reduce the balances of an estimated 23 million more.

But a second provision may be just as consequential. The Department of Education will propose a rule that reforms existing income-driven repayment plans for loans taken out for undergraduate education. Borrowers qualifying for these plans will see their maximum monthly payments cut from 10 percent to 5 percent of their discretionary income, debt will be forgiven after 10 years instead of 20 or 25, and the government will cover remaining monthly interest so borrowers’ balances don’t grow.

Third, Biden is again extending the pause on federal student-loan interest and payments, which began under President Donald Trump. Payments will resume after Dec. 31.

How the student debt payment pause affected Latinx millennials

GOP opposition and a Democratic divide

Republican leaders have strongly criticized the measure, labeling it a handout that will help the wealthy and arguing it will increase inflation.

Just as predictably, most Democrats applauded Biden, including progressive members of Congress who have been pushing him to act on student debt. But some moderate Democrats in contested races have also spoken against the debt relief, such as Sen. Catherine Cortez Masto (D-Nev.) and Rep. Sharice Davids (D-Kan.), who criticized it for not addressing rising tuition costs. Some progressives, such as Rep. Pramila Jayapal (D-Wash.), have urged Biden to go further and forgive $50,000 per person.

Democrats may benefit at the ballot box

Public opinion polls consistently find that erasing student debt is a widely popular policy, especially among Democratic voters. But will relief actually bring in more Democratic votes on election day?

Before Biden announced his plan, we conducted an online survey May 20-26 with a sample of 1,500 U.S. adults. We asked people what types of borrowers they thought most deserved student debt relief, what types of plans they would support and how action on debt relief might shape their voting behavior. The survey was fielded by Prolific through an opt-in panel targeted to match Census Bureau estimates for gender, race and ethnicity, and age.

Here’s what our research suggests about how voters may react to Biden’s proposal:

  • {‘type’: ‘text’, ‘content’: ‘Broad support for debt relief: Seventy percent of those surveyed supported federal student debt relief, including 85 percent of Democrats, 61 percent of independents, 40 percent of Republicans, 81 percent of those with student debt and 85 percent of people under age 35.’, ‘_id’: ‘NGRX7AXSRZH77DZLMY3QECIJ3M’, ‘additional_properties’: {‘comments’: [], ‘cadit_quaestio’: [], ‘inline_comments’: []}, ‘block_properties’: {}}
  • {‘type’: ‘text’, ‘content’: ‘Canceling $10,000/$20,000 in student loan debt: People believe borrowers who struggle to repay their loans because of financial need are the most deserving of assistance, so capping income on debt cancellation and giving more generous benefits to Pell recipients should be popular. But Democratic constituents are more likely to prefer and reward policymakers who support debt cancellation of $50,000 or more compared with plans to cancel only $10,000 of debt.’, ‘_id’: ‘GQNJUC2GERDURETFA5WZJNIKQI’, ‘additional_properties’: {‘comments’: [], ‘cadit_quaestio’: [], ‘inline_comments’: []}, ‘block_properties’: {}}
  • {‘type’: ‘text’, ‘content’: ‘Reforming income-driven repayment: Our respondents thought borrowers were more deserving of help if they had been paying off their loans for five years or longer, so they should approve of Biden’s plan to reduce monthly payments and halve the amount of time borrowers must repay debt before it’s forgiven. But people did not support restricting relief to undergraduate debt, so limiting the new program to undergraduate debt may not be as popular, especially among Democratic voters.’, ‘_id’: ‘I4BIFPKQEVAJPJUZDMKEIQZTOA’, ‘additional_properties’: {‘comments’: [], ‘cadit_quaestio’: [], ‘inline_comments’: []}, ‘block_properties’: {}}
  • {‘type’: ‘text’, ‘content’: ‘Republicans and Democrats: Some Republicans become a little less supportive of debt relief when told it unduly benefits wealthy borrowers or borrowers of color. Democrats don’t change their minds when they read such criticism. Republican criticism of the plan could dampen support among GOP voters, potentially reducing the numbers who use it, as happened with the Affordable Care Act.’, ‘_id’: ‘LNR4SODBJFGXXISFEHFSMZ2OME’, ‘additional_properties’: {‘comments’: [], ‘cadit_quaestio’: [], ‘inline_comments’: []}, ‘block_properties’: {}}

While Democrats are likely to win some votes based on this student-debt relief plan — and Biden’s approval ratings should go up — Democrats may have reaped greater political rewards had Biden offered $50,000 of debt cancellation and reformed plans for graduate borrowers as well.

College students have been voting at record rates. Why?

Challenges ahead

If the Department of Education can implement it effectively, the new plan will reduce or entirely wipe out student debt for millions, helping to shrink the racial wealth gap and freeing up resources for people to invest in their future. But there are several hurdles to clear.

Existing student-debt forgiveness programs have reached few eligible borrowers, because the applications are inefficient and inflexible. When new programs are hard for people to use, public support for the program can sour. The success of Biden’s plan will depend on whether bureaucrats design user-friendly applications and what they get through the regulatory rulemaking process — and, of course, on whether the program survives promised Republican legal challenges.

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Mallory E. SoRelle (@SoRelleM) is an assistant professor at Duke University’s Sanford School of Public Policy and author of Democracy Declined: the Failed Politics of Consumer Financial Protection (University of Chicago Press, 2020).

Serena Laws (@SerenaLaws10) is a senior lecturer in political science at Trinity College, in Hartford, Conn.