Biden Cancels Billions More in Student Loan Debt

Biden Cancels Billions More in Student Loan Debt

Biden at the White House today
Yuri Gripas/Pool/Sipa USA
By Yuval Rosenberg and Michael Rainey
Wednesday, May 22, 2024

Good Wednesday evening. On this date 60 years ago, President Lyndon B. Johnson detailed his “Great Society” agenda in a commencement address at the University of Michigan. Johnson proposed the largest expansion of the social safety net since the New Deal and called for an end to poverty and racial injustice.

“For a century we labored to settle and to subdue a continent. For half a century we called upon unbounded invention and untiring industry to create an order of plenty for all of our people,” Johnson said. “The challenge of the next half century is whether we have the wisdom to use that wealth to enrich and elevate our national life, and to advance the quality of our American civilization.”

Here’s what’s happening today.

Biden Cancels Another $7.7 Billion in Student Loan Debt

The Biden administration announced Wednesday that it is canceling another $7.7 billion in student loans held by 160,000 borrowers.

The latest round of debt cancellation means the administration has now forgiven $167 billion worth of student loans, in an effort that the White House says has benefited 4.75 million people, or more than 10% of all those with student loan debt in the U.S. On average, each debtor has received roughly $35,000 in forgiveness.

In a statement, President Joe Biden touted his long-running campaign to cancel student debt, which includes a massive effort potentially benefiting 40 million people that was shot down by the Supreme Court last year. He also highlighted the politics involved in student loan forgiveness. “I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” he said. “I will never stop working to cancel student debt — no matter how many times Republican elected officials try to stop us.”

The loans being canceled are associated with three loan programs. The largest batch, valued at $5.2 billion, will go toward 66,900 borrowers currently in the Public Service Loan Forgiveness program, which cancels loans for debtors who work in public service jobs and make loan payments for 10 years.

Another 54,300 borrowers in the Saving on a Valuable Education repayment plan, known as SAVE, will also receive debt forgiveness, worth $613 million. Under new rules imposed by the Biden administration earlier this year, borrowers in the SAVE program who owe less than $12,000 are now eligible for forgiveness after making payments for 10 years.

The third group receiving debt forgiveness is 39,200 borrowers who have been making payments on their student loans for at least 20 years. Those loans are valued at $1.9 billion.

What comes next: The Biden administration is pushing ahead on student loan cancelation despite legal challenges. Eleven states led by the Republican attorneys general in Kansas and Missouri have sued to block the cancellations, and those cases are still pending. The suits claim that the Biden administration lacks the authority to unilaterally forgive billions of dollars in student loan debt.

In April, the White House unveiled a proposal for a sweeping new loan forgiveness program that could benefit more than 30 million borrowers. The proposal is still in the rule-making process, but the administration reportedly wants to move ahead with it in the fall. If enacted, the new loan forgiveness program will likely be greeted by another round of legal challenges.

SNAP Benefits Fail to Cover Food Costs Almost Everywhere in the U.S.: Analysis

SNAP benefits, more commonly known as food stamps, were too low to help families afford food across most of the country last year, according to a new analysis published by the Urban Institute and the Robert Wood Johnson Foundation.

The analysis finds that SNAP did not cover the cost of a modestly priced meal in 98% of U.S. counties in 2023. “In the last quarter of 2023, a 53-cent gap remained between the $3.37 cost of a modestly priced meal, and SNAP’s average maximum benefit of $2.84—a shortfall of 19%,” the report says. The gap was wider in urban areas than in rural areas.

On a monthly basis, the benefits fell short of covering food costs by nearly $50 for families with no net income.

The report also says that the cost-of-living adjustment in the benefit for last year did little to help, even as food price inflation moderated; the share of counties where the benefit was “inadequate” only dipped from 99% to 98%.

Why it matters: “SNAP is not only the country’s most effective tool for reducing food insecurity, but it has also been shown to reduce poverty and boost economic activity, especially during recessions,” report authors Elaine Waxman and Poonam Gupta write.

Their analysis comes as Congress is working to reauthorize the Farm Bill, which sets SNAP funding. A House markup of the bill by the Agriculture Committee is scheduled for tomorrow morning.

House Republicans and Senate Democrats are clashing over a GOP proposal that would reverse Biden administration changes meant to allow the benefit to keep pace with the rising cost of healthy foods. Republicans insist their plan would not cut current aid, but it would essentially prevent the benefit from increasing or decreasing except to reflect the cost of living. They say it “corrects egregious Executive branch overreach and disallows future unelected bureaucrats from arbitrarily increasing or decimating SNAP benefits.”

The Urban Institute authors argue that the Republican proposal would reduce SNAP spending and “would ensure SNAP benefits do not meet families’ nutritional needs and would eliminate pathways for making SNAP benefits adequate.”

Number of the Day: 56%

Most Americans think the U.S. economy is in a recession, even though it is not, according to a poll released Wednesday. The new Guardian/Harris poll found that 56% of respondents said the economy is in a recession, while 55% said the economy is shrinking. In fact, gross domestic product has been growing for several years.

Other surprising results include misperceptions about employment and the stock market. Forty-nine percent of respondents said they think the S&P 500 is down for the year, though the market is up about 12% in 2024, following a 23% gain in 2023. And 49% said they think unemployment is at a 50-year high, even though the unemployment rate has been under 4% for the longest stretch since the Vietnam War.

The results are troubling for President Biden, who has been touting the remarkable strength of the U.S. economy — a strength that is reflected in statistics such as the unemployment rate and GDP growth, but not necessarily felt in people’s everyday lives. Even worse for Biden, 58% of respondents blame him for the non-existent recession.

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