Biden uses GOP tax cuts to clap back at claims student loan plan isn't 'fair' to those who paid

Joe Biden wouldn’t answer on Wednesday the big question of if forgiving $10,000 per borrower is fair for Americans who saved up, worked through college or quickly paid off their loans after school.

Instead, the president used Donald Trump’s tax cuts as a rebuke, questioning whether it was fair that multi-billion-dollar companies received breaks when Republicans were in power.

He also insisted that inflation would not be impacted by the forgiveness plan.

‘Independent experts agree that these actions taken together will provide real benefits for families without meaningful effect on inflation,’ Biden said during a press conference on Wednesday.

Biden appeared with Education Secretary Miguel Cardona to officially announce his administration is canceling $10,000 in debt for individuals making less than $125,000 annually and joint filers making less than $250,000. Those who received Pell Grants for college will be eligible for $20,000 in relief under the same salary thresholds.

He also noted at the press conference, following his Twitter announcement of the future of student loan forgiveness, that he is extending the pandemic-era repayment moratorium just one more time. Borrowers will need to resume their payments come January.

Republicans immediately bashed the forgiveness plan as ‘unfair’, claiming families who worked hard to save or pay for college will not receive the benefits.

Biden’s Domestic Policy Council Director Susan Rice accused Republicans of a double standard, claiming they were on board with the Paycheck Protection Program under Donald Trump that gave small businesses loans, without obligation, to continue operating during the pandemic and pay their workers.

President Joe Biden insisted Wednesday in a White House press briefing that his plan to forgive lump sums of student debt will not impact inflation

President Joe Biden insisted Wednesday in a White House press briefing that his plan to forgive lump sums of student debt will not impact inflation

While leaving the Roosevelt Room with Education Secretary Miguel Cardona in tow, Biden turned to deflect a question on whether canceling debt is fair to those who worked to pay their way through college, instead asking if Republican's tax cuts on the wealthy was fair

While leaving the Roosevelt Room with Education Secretary Miguel Cardona in tow, Biden turned to deflect a question on whether canceling debt is fair to those who worked to pay their way through college, instead asking if Republican’s tax cuts on the wealthy was fair

President Joe Biden announced his student loan forgiveness plans via Twitter on Wednesday, hours before his remarks. It includes $10,000-$20,000 in loan relief for individuals making less than $125,000 and joint filers making less than $250,000

President Joe Biden announced his student loan forgiveness plans via Twitter on Wednesday, hours before his remarks. It includes $10,000-$20,000 in loan relief for individuals making less than $125,000 and joint filers making less than $250,000

‘There is inaccuracy, but there is also a double standard – and this is a debate we are happy to have,’ Rice said during a White House press briefing when asked about GOP push back on the relief plan.

‘First of all, Republicans didn’t complain when certain small businesses during the pandemic got extraordinary financial relief without having to pay back those loans. Some businesses needed it and other businesses didn’t need it,’ she said. ‘This is the same principle. We have a country where we all benefit when the working and middle class are doing well.’

Politicians from both parties also claim that the plan is not beneficial for the long-term economic future of America, with some models predicting that debt will return to their current levels in just four years.

An analysis from the National Taxpayers Union Foundation claims that the plan will also end up costing every taxpayer $2,085.59 – even those who did not benefit from the forgiveness.

A study from the Penn Wharton Budget Model estimates that forgiving student loan debt could cost between $300 and $980 billion over 10 years. It also notes the majority of relief would go towards borrowers who are within the top 60 percent of earners.

BIDEN’S STUDENT LOAN FORGIVENESS: WHAT IT MEANS FOR BORROWERS

President Joe Biden announced his relief plan for federal student loan borrowers on Wednesday, which includes: 

– $10,000 forgiveness for borrowers earning $125,000 individually or $250,000 jointly 

– $20,000 forgiveness for Pell Grant recipients earning $125,000 individually or $250,000 jointly

– Aims to cap undergrad loan payments at 5 percent of their monthly income 

– Graduate program and Parent Plus loans are eligible 

– Student loan repayment pause was extended for the last time until December 31, 2022

The White House insisted in a background call on the move that none of those within the top 5 percent of earners in the U.S. will receive student loan forgiveness.

‘Is it unfair to people who paid their student loans or chose not to take out loans?’ a reporter asked Biden at the tail end of the press conference.

‘Is it fair to people who, in fact, do not own multi-billion-dollar businesses… some of these guys want to give them all tax breaks. Is that fair?’ Biden shot back as he stopped exiting the room to address the question.

‘What do you think?’ he added before leaving and ignoring other shouted questions.

Biden claims the Inflation Reduction Act, among other Democratic initiatives, would help cut costs in other places to pay for ambitious plans like the repayment proposal.

Larry Summers, who served as a top economic adviser under President Barack Obama, warned the Biden administration against ‘unreasonably generous’ student loan relief and predicted it would further raise inflation .

He also said that the ‘worst idea’ would be to continue the current moratorium on student loan payments.

Former chairman of Obama’s Chief Economic Council Jason Furman also posted a lengthy Twitter thread speaking out against Biden’s student loan relief.

‘Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,’ he said. ‘Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.’

He also warned the other ‘problematic impacts’ of the plan could be higher tuition and the encouragement of even more borrowing, leading to higher debt and expectations of more forgiveness in the future.

Up to 42 million people will now see some sort of forgiveness and Biden noted that another $20 million borrowers earning less than $75,000 could see their debt completely wiped out.

Biden was joined by Education Secretary Miguel Cardona, who will be tasked with carrying out the forgiveness plan. He did not speak during the press conference on Wednesday

Biden was joined by Education Secretary Miguel Cardona, who will be tasked with carrying out the forgiveness plan. He did not speak during the press conference on Wednesday

Furman noted in his Twitter rant Wednesday that a ’24 year-old making $75,000 is likely to be at a relatively high percentile on a lifetime basis.’

Biden announced the fifth and final moratorium extension will go through the last four months of 2022.

‘It’s time for the payments to resume,’ he insisted in his White House remarks on Wednesday.

While Secretary Cardona stood behind the president’s left shoulder on Wednesday, he did not speak.

In order to get the bulk forgiveness through, the administration is using a post-9/11 law that allows the president to change student loan rules in the midst of a public emergency – including the current one. 

Biden claims the lump sum relief is aimed at helping wane Americans back into their monthly student loan payments. 

Senate Minority Leader Mitch McConnell slammed the relief announcement as ‘unfair’ and a ‘slap in the face’ for families that worked years to save money to pay for college and said the forgiveness will only add to the country’s economic woes.

Arkansas Senator Tom Cotton said he will introduce an alternative to the program in the form of a bill he says will ‘save taxpayers billions’ by holding colleges accountable for massive debts as well as lowering tuition rates and supporting more non-college career paths.

‘There is no such thing as student loan forgiveness—this is a bailout, paid for by the large majority of Americans who never went to college or who responsibly paid off their debts,’ said the GOP senator. ‘Even worse, President Biden’s plan ignores the true culprit: bloated, self-serving colleges.’

Former Vice President Mike Pence called the relief ‘another unsustainable and reckless policy from the Biden Administration.’

‘Canceling debt will cost taxpayers hundreds of billions of dollars and only incentivize colleges to raise tuition even more! Unacceptable.’

Biden tweeted on Wednesday: ‘In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.’

Republicans weren’t the only ones who felt the move wasn’t in the best interest of American taxpayers.

New Hampshire Democratic Representative Chris Pappas noted in a Wednesday statement: ‘This announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities.’

Borrowers have had federal student loan payments and interest remain in limbo since the onset of the coronavirus pandemic on March 20, 2020. The pause was extended by both former President Donald Trump and President Biden several times.

The fourth extension expires on August 31, and the down-to-the-wire announcement had borrowers on the edge of their seats waiting to hear the future of their debts to the government.

The announcement on Wednesday notes that individuals making $125,000 annually are eligible for the $10,000 or $20,000 forgiveness – depending on their Pell Grant status. And joint earners making under $250,000 will also be eligible to receive the relief. 

Some are questioning the legality of the move for the administration to unilaterally forgive massive swaths of federal student loans.

The Education Department, however, released a five-page memo on Wednesday laying out that the plan relies on the 2003 HEROS Act, which gives power to the executive to waive or modify rules on federal student loans in the midst of a presidential declared national emergency.

They also moved to rescind a Trump-era memo, prepared just days before he left office by an outgoing political appointee, that concluded the DOE lacks power to forgive this type of debt.

President Biden, arriving back at the White House on Wednesday, August 25, announced the fifth and final student loan repayment pause extension to go through the end of 2022

President Biden, arriving back at the White House on Wednesday, August 25, announced the fifth and final student loan repayment pause extension to go through the end of 2022

‘Washington Democrats have found yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of working American families who can barely tread water,’ McConnell said in a statement Wednesday. 

He called Biden’s plan ‘student loan socialism.’

‘President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt. This policy is astonishingly unfair.’

A new analysis released Tuesday from the Penn Wharton Budget Model estimates that forgiving student loan debt for those making under $125,000 could cost between $300 and $980 billion over 10 years.

It also notes that the majority of relief, between 69 and 73 percent, would go towards borrowers who are within the top 60 percent of earners.

The Penn Wharton budget group, which is based out of the University of Pennsylvania and run by the top Treasury official under George W. Bush, is highly influential with key lawmakers, including moderate Democratic Senator Joe Manchin.

The nonprofit National Taxpayers Union Foundation says, based on the Penn analysis, that canceling $10,000 per borrower would cost each taxpayer $2,085.59 – even those Americans without outstanding student loans who did not benefit from the forgiveness.

The Education Department also announced on Tuesday $10 billion more in student debt relief for more than 175,000 borrowers with government and non-profit jobs who qualify for the Public Service Loan Forgiveness (PSLF) program.

The administration already forgave $32 billion as part of targeted student loan relief programs.

House Minority Leader Kevin McCarthy responded to studies claiming the forgiveness would benefit some of the top income brackets and cost individual taxpayers thousands to pay off the loans of ‘highly educated, rich borrowers.’

‘[W]ho pays for it?’ the California Republican questioned in a Wednesday statement. ‘Hard-working Americans who either already paid off their debts or never incurred debt in the first place.’

The $10 billion in forgiveness announced Tuesday comes after only 7,000 borrowers ever qualified for relief under the PSLF program before Biden’s presidency.

The fifth and final extension will go through the end of 2022

The fifth and final extension will go through the end of 2022 

Changes to the program for public workers, announced by DOE on Tuesday, and the $10 billion in forgiveness marks one of the largest swaths of debt canceled by the federal government.

Most recently, as part of targeted relief programs, the administration canceled $3.9 billion in student debt for 208,000 borrowers who attended the now defunct ITT Technical Institute.The latest round of forgiveness will bring the total student loan forgiveness total under Biden to more than $40 billion. 

The latest round of forgiveness will bring the total student loan forgiveness total under Biden to more than $40 billion.

‘Today’s announcement that we’ve surpassed $10 billion in forgiveness for more than 175,000 public servants shows that the Biden-Harris administration’s efforts to cut red tape are turning the Public Service Loan Forgiveness program from a promise broken into a promise kept,’ Secretary Cardona said in a Tuesday statement.

‘We’re committed to helping borrowers who choose to pursue careers in education, public health, social work, law enforcement, and other critical fields receive the benefits to which they’re entitled for leading lives of service.’

The Public Service Loan Forgiveness program is notorious for being difficult for borrowers to navigate.

Among those who qualify are government and nonprofit employees, but it can also include teachers, firefighters, nurses, doctors and public defenders.

Progressives, like Senator Bernie Sanders (pictured during a rally for forgiveness on April 27), are pushing for complete cancelation of outstanding federal student loans. They say $10,000 in forgiveness doesn't go far enough

Progressives, like Senator Bernie Sanders (pictured during a rally for forgiveness on April 27), are pushing for complete cancelation of outstanding federal student loans. They say $10,000 in forgiveness doesn’t go far enough

Those who had outstanding federal student loans have not had to make monthly payments for nearly two-and-a-half years and saw their interest accruement also put on hold during the public health emergency, which also saw the onset of mass layoffs and furloughs.

Despite the job market recovering, the U.S. is still experiencing a series of economic crises, including record-high gas prices, inflation and a traditionally defined recession with two consecutive quarters of negative Gross Domestic Product (GDP) growth.

Summers tweeted over the weekend: ‘I hope the Administration does not contribute to inflation macro economically by offering unreasonably generous student loan relief or micro economically by encouraging college tuition increases.’ 

‘The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers,’ the Clinton-era Treasury secretary and Obama-era National Economic Council director added.

‘Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college,’ Summers wrote on Twitter.

‘Student loan debt relief is spending that raises demand and increases inflation. It consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college. It will also tend to be inflationary by raising tuitions.’

source: dailymail.co.uk