Biden’s New Student-Debt Strategy
How the return of student-loan payments will affect Americans—and what the administration is trying to do about it
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Yesterday, President Joe Biden announced an additional $9 billion in student-loan forgiveness. Since Biden’s mass student-loan-forgiveness plan was struck down by the Supreme Court this past summer (student-loan repayments officially resumed on October 1), his administration has been focusing on narrower strategies for relieving student debt, such as an income-driven repayment plan. I called Atlantic staff writer Adam Harris, who covers higher education, to discuss what’s next for the Americans most affected by the return of repayment, and the case for higher education as a public good.
First, here are three new stories from The Atlantic:
The Basis of Public Happiness
Isabel Fattal: What do you make of yesterday’s news of another $9 billion in debt relief?
Adam Harris: There are a few different programs that this relief, which covers about 125,000 people, is coming out of; it is the result of changes Biden made to income-driven repayment plans, as well as public-service loan forgiveness and relief for some borrowers with disabilities.
Over the past several years, the Biden administration has forgiven something like $127 billion in student debt—more than any other administration. Now it’s using some of the programs and levers already available to try to relieve even more. The current total is nothing to scoff at, but it still is only a small crack in the armor of this $1 trillion debt burden we have in the United States. What they’re trying to do is provide as much relief as possible under the programs that they believe are still legal.
Isabel: Who will likely be most affected by the return of student-loan payments this month?
Adam: A consistent fact over the past 20 years is that the borrowers who are most at risk for being in default, who are struggling to repay their student debt, are typically low income and from racial-minority groups—Black borrowers, Latino borrowers. A few months ago, the Consumer Financial Protection Bureau warned that basically one in five student borrowers has risk factors that indicate they could struggle now that student-loan payments have resumed. We know that discretionary spending helps the economy, and big-box retailers like Best Buy and Target have recently expressed concerns about the impacts of the return of repayment on their businesses. A Goldman Sachs report said that something like $70 billion of discretionary income will now be going toward these student-loan payments. If you think of discretionary income, it's not necessarily people going out and buying TVs. It’s that they have a little bit of additional money to do things with.
It’s not necessarily the folks who have $40,000, $50,000, $60,000, $70,000 in student debt, who went to medical school or went to law school, who make up the majority of borrowers who struggle. It’s people who started college and didn’t end up finishing. It’s people who have fewer than $10,000 in student-loan debt who will be likely struggling to repay that debt, even with a repayment plan that’s something like an extra $100 or $200 a month. That’s a car payment. That’s a bill that they will have to consider paying late.
Isabel: You wrote last year that mass student-debt forgiveness is not a solution for the underlying issue of college affordability in America. Are there notable government initiatives in place to tackle the issue of college affordability right now?
Adam: The Biden administration reintroduced a free-community-college proposal in its budget plan this past March. It was ultimately unsuccessful, but it shows that the administration is still interested in some of those programs that will remove the necessity for debt on the front end. Oftentimes we think of higher education as a private good, something that is for the benefit of the student who gets the degree, rather than thinking of it as a public good. At the founding of this nation, some of the Founding Fathers effectively said there is nothing that better deserves your patronage than education.
“Knowledge is in every country the surest basis of public happiness.” That’s George Washington to Congress in his first State of the Union address, saying that in order to build good citizens, you need educated citizens. I often think of that in this moment, when we’re requiring people to go deeply into debt in order to afford this thing that at the beginning people thought was essential to citizenship.
Isabel: Is there anything else you’re thinking about these days in terms of student debt?
Adam: There was a really interesting paper released recently, less focused on student-loan repayment and more about how we think and talk about student loans and how the media covers student loans. Dominique Baker was the lead researcher on it. One of the biggest findings was that very few of the people who had written articles about student loans among eight major publications had ever attended a community college, and the majority of them attended Ivy Plus or public flagship colleges.
If you look across America, around 40 percent of students who are enrolled in higher education in the nation attend community colleges. I have a lot of friends who started college, did not finish college, and now have something like $8,000 of student debt that they’re looking at, saying, How am I going to pay that off with my job that is only giving me enough to afford the basics of living? There are a lot of opportunities for the situation that we are in to spiral into an unsustainable one for a lot of people.
Related:
Today’s News
- At least 51 people have died after a Russian missile strike near the Ukrainian city of Kupiansk, in one of the deadliest attacks on civilians of the war.
- In a sweeping move, the Biden administration waived 26 federal laws in South Texas to allow for border-wall construction.
- Last month was the hottest September ever recorded, to the alarm of climate scientists.
Evening Read
Does Sam Altman Know What He’s Creating?
By Ross Andersen
On a Monday morning in April, Sam Altman sat inside OpenAI’s San Francisco headquarters, telling me about a dangerous artificial intelligence that his company had built but would never release. His employees, he later said, often lose sleep worrying about the AIs they might one day release without fully appreciating their dangers. With his heel perched on the edge of his swivel chair, he looked relaxed. The powerful AI that his company had released in November had captured the world’s imagination like nothing in tech’s recent history. There was grousing in some quarters about the things ChatGPT could not yet do well, and in others about the future it may portend, but Altman wasn’t sweating it; this was, for him, a moment of triumph.
In small doses, Altman’s large blue eyes emit a beam of earnest intellectual attention, and he seems to understand that, in large doses, their intensity might unsettle. In this case, he was willing to chance it: He wanted me to know that whatever AI’s ultimate risks turn out to be, he has zero regrets about letting ChatGPT loose into the world. To the contrary, he believes it was a great public service.
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Listen. In the latest episode of Radio Atlantic, host Hanna Rosin explains the real reason Biden’s political wins don’t register with voters.
Katherine Hu contributed to this newsletter.
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