If there was a nonpolitical rationale almost three years ago to pause student loan payments, that rationale no longer exists.
But still the pause continues, extended once again this past week by President Joe Biden.
It may now be August 2023 at the earliest before the first student loan payment is made.
Student loan payments were originally paused during the Trump administration in March 2020 due to the economic hardships caused by the COVID-19 pandemic. Even after trillions of dollars of government aid and a robust economic rebound had wiped out most of those hardships, the Biden administration has repeatedly extended the pause, coming up with new excuses as needed.
The latest explanation is that with Biden’s plan to forgive up to $20,000 in student loan debt tied up in the courts, it would not be fair to ask borrowers to pay a debt that could be forgiven.
That excuse is full of holes, as Justin Haskins, a director at the free-market think tank Heartland Institute, points out in a recent opinion column in The Hill, the newspaper that covers Congress.
The first and most obvious contradiction is that there are plenty of borrowers who owe more than $20,000. The average student loan debt is around $40,000, and about 25% of borrowers owe more than the average. If the Biden administration was worried about collecting on a debt that’s later forgiven, why did it not just resume payments on all debt above $20,000?
The answer is this: Biden and the Democrats’ attitude toward student loans has nothing to do with fairness. It is all about buying votes, and it apparently worked to some degree in the November midterms, in which Democratic losses were much less than what would normally have been expected.
What is unfair is the whole idea of forgiving student loans at all, which requires passing on the cost to other taxpayers. It’s unfair to those who made it through college without taking out loans or who have already paid off what they borrowed. It’s also unfair to those who didn’t go to college, who may be laboring under debt burdens of their own that receive no special consideration.
One little-known result of all these extensions — the latest is No. 8 — is how much it disproportionately benefits two classes of debtors: those who work for government agencies, including teachers in public schools, and those who work for nonprofit agencies.
As Haskins relates, the Biden administration is nonsensically allowing these workers to count all of these months of nonpayments toward the 120-month payment total they must reach in order to have the rest of their debt forgiven under an already existing loan forgiveness program. Since these voters tend to skew Democratic, it’s a huge break targeted specifically to Biden’s base.
Perhaps the main driver, though, for this latest extension is that the pause has gone on so long that no one in office wants to be responsible for ending it. Biden certainly doesn’t want to do it unless he can at the same time wipe off the books a significant share of that debt. That’s why Haskins expects the pause will be extended again next year.
“Forcing tens of millions of borrowers to pay a bill they haven’t seen in years is a political loser,” he writes. “It makes much more sense for Biden to continue ‘pausing’ debt payments until he’s no longer living at 1600 Pennsylvania Avenue. Then it will be some other president’s problem.”