A new editorial from the Washington Post rips President Joe Biden’s latest extension of the student loan payment pause.
Here’s what you need to know.
Student loan borrowers may be cheering for more student loan relief, but not everyone is happy with Biden’s policy decision to extend the student loan payment pause through August 31, 2022. In a scathing editorial published Friday, the Washington Post Editorial Board wrote the following:
- “extending the pause on student loan payments makes no sense”;
- the start of the pandemic two years ago was a national emergency that warranted student loan relief, but today it’s unjustified;
- college graduates aren’t struggling now;
- the unemployment rate for Americans with a bachelor’s degree or higher is 2%;
- the unemployment for Americans with “some college” is 3% (compared with 15% in April 2020); and
- “there is a near-record number of job openings.”
(Student loan payment pause: 5 questions)
Student loan payment pause hurts Americans who need the most financial support
According to the Editorial Board, the student loan payment pause disproportionately benefits higher-income earners, such as those student loan borrowers with a medical or law degree. Why? The student loan debt crisis is traditionally described as impacting student loan borrowers who attended college. However, nearly 50% of all student loan debt is from graduate school. These student loan borrowers, on average, earn a higher income than both college and high school graduates. Approximately 64% of Americans don’t have a college degree. (Biden still considering wide-scale student loan cancellation). This means that Biden’s student loan relief doesn’t benefit these Americans. The Editorial Board notes that “It would be far more equitable and effective to give rebates to low- and moderate-income households.” (Biden could extend the student loan payment pause forever).
The Committee for a Responsible Federal Budget notes that the latest extension of the student loan payment pause will cost $20 billion. As the Washington Post notes, this is almost equal to the annual budget of the Pell Grant program — which helps students with exceptional financial need pay for college. In his latest budget proposal, Biden proposed doubling Pell Grants, a proposal that perhaps could have paid for absent government spending on the student loan payment pause. (New proposal would extend student loan payment pause and cancel student loans).
“Wherever one stands on student debt relief, this approach is regressive, uncertainty creating, untargeted and inappropriate at a time when the economy is overheated,” former U.S. Treasury Secretary Lawrence Summers tweeted. Summers, a Democrat, has served as President of Harvard University and in the Clinton and Obama administrations. (Student loan cancellation and the student loan payment pause are confusing. Here’s what to know).
Why Biden extended the student loan payment pause
Why did Biden extend the student loan payment pause? According to the Editorial Board: it’s all about politics. The midterm election is on November 8, 2022. To galvanize the Democratic base, the argument goes, Biden extended student loan relief for 41 million student loan borrowers. Without an extension, progressive Democrats such as Rep. Alexandria Ocasio-Cortez (D-NY) have argued that extending the student loan payment pause is a must for Democrats to retain control of Congress. (Senator: Cancel all student loans). She also argues that Biden must follow through with wide-scale student loan cancellation before the midterm election. (Here’s who won’t qualify for $6.2 billion of student loan cancellation). While the Editorial Board doesn’t dispute higher inflation causes financial stress, the Editorial Board argues that the economy is much healthier today compared with the start of the Covid-19 pandemic. If any relief should be delivered, the Washington Post argues, it should be directed toward Americans who need it the most.
Currently, student loan payments are scheduled to restart beginning September 1, 2022. Are you prepared? Make sure you know all your options for student loan payments. Here are some smart options to save money: