In a letter despatched to the president on Wednesday, practically half of American governors—all Republican—voiced their opposition to Biden’s scholar mortgage forgiveness plan, introduced final month.
“We essentially oppose your plan to power American taxpayers to repay the scholar mortgage debt of an elite few,” they write within the letter.
The primary argument is that Biden’s scholar debt forgiveness will hurt lower-income households by forcing their hard-earned {dollars} to go to repaying the money owed of America’s wealthiest, together with high-salary legal professionals and medical doctors who maintain debt from graduate levels.
“The highest 20 % of incomes households maintain $3 in scholar debt for each $1 held by the underside quintile, producing a lopsided actuality the place the rich profit on the expense of the working,” the governors write of their letter. “Merely put, your plan rewards the wealthy and punishes the poor.”
However this argument misses the truth that Biden’s debt forgiveness undertaking contains two completely different components aimed particularly at stopping America’s wealthiest from acquiring debt forgiveness, as a substitute limiting this system to middle- and lower-income households.
First, the plan will reserve increased ranges of forgiveness for college students who come from low-income backgrounds. Biden’s order will forgive $10,000 of federal scholar loans for all debtors, however as much as $20,000 for college students who took out Pell Grants for faculty. Pell Grant recipients, by definition, solely qualify for these grants if they’re from the lowest-income households.
Moreover, the wealthiest Individuals gained’t qualify for debt forgiveness as a result of they earn an excessive amount of cash. Biden’s plan is restricted to debtors who earn at most $125,000 yearly. That wage is way under the pay for many medical doctors, company legal professionals, or MBA-wielding bankers or consultants.
These controls are a key purpose why about 90 % of the debt reduction from Biden’s plan will go to individuals making lower than $75,000 a yr. That could be a far cry from the “elite few” that America’s Republican governors declare Biden is enriching with the hard-earned {dollars} of middle-class employees.
In the direction of the top of their letter, the governors additionally query whether or not Biden has the authority to unilaterally forgive debt by means of government order. The administration’s Workplace of Authorized Counsel and the Division of Training each issued opinions final month in assist of Biden’s authority to maneuver forward on canceling scholar debt. However the governors’ level previews the reasoning that’s more likely to come up in authorized challenges to Biden’s debt forgiveness plan—as soon as Republican-backed teams determine how, precisely, to go after it in courtroom.
The governors additionally criticize Biden for working towards debt cancellation with out addressing the basis causes of America’s ballooning scholar mortgage disaster: curiosity on scholar loans that make them even more durable to pay down, in addition to astronomical school tuition charges. On this, they’re proper. Faculty tuitions are at file highs, and curiosity on scholar debt is ready to be turned again on on the finish of the yr, after an almost three-year pandemic pause—with no plan for how one can stop the scholar debt disaster from refueling itself in a matter of years.