The political fight over student debt rages on as Democrats and Republicans clash over what will actually help a large sector of the US population. Republicans in Congress say that President Biden's student debt cancelation plan is too expensive for taxpayers, and that it's not fair to Americans who didn't attend college,
don't have student loans, or already paid them off. There's also concern about the impact of student loan forgiveness on inflation, which is the battle the Fed has already been fighting for months. But then there's consumer spending. By some estimates, the return of student loan payments will cut consumer spending by up to nine billion dollars each month because borrowers
won't have money to put back into the economy. To get a sense of what progressives see as the way forward on canceling student debt, I sat down with Senator Elizabeth Warren of Massachusetts in her Senate office here in Washington.
Why folks can't afford to send me to college. But I made it through four years of college with not a penny of student loan debting. You know why, because when I went to school, you could go to the University of Houston, where I went for fifty dollars a semester, I could go to college and pay for it on a part time waitressing job. That opportunity is just not out there for most of our kids.
Bloomberg White House correspondent A Kayla Gardner also joins me to look at how the other side of the aisle is viewing the issue of student debt and what this all means for the administration heading into twenty twenty four.
If you look at pulling student debt, cancelation is pretty split. It's pretty divided amongst the elector at large.
Americans are now preparing for student loan payments to resume, but the Biden administration is working on a Plan B to help all those borrowers who had high hopes of getting a little help with the burden of student debt. We spoke to a few student borrowers about what they hope comes next.
My hope for the Biden administration student loan forgiveness is that they come up with another plan. There's so many borrowers that really believe that getting these loans and being able to pay them back after graduation would help them in the future. But the high interest rates have them traps.
My hope from the Biden administration is that their Plan B is able to go through utilizing the Higher Education Acts.
I also like their idea.
Of the on ramp. My biggest thing is I want them to look at it from an equitable standpoint and just say, y'all made a decision, the better your life, you shouldn't have to spend your whole life paying for it.
I'm Nancy cook In today for west Kosova Today on the Big Take, what's next for student loan forgiveness after the Supreme Court rejected the Biden administration's first attempts. Senator Elizabeth Warren is a fierce advocate for the Biden loan forgiveness plan, so I asked her what the next steps are for those who still hope for student debt relief and how the administration is setting the scene for a Plan B. Senator Warren, the Supreme Court struck down President
Biden's efforts to cancel student debt. Now the administration wants to keep pursuing it, only using a different legal rationale. But I'm curious, since they've struck it down the first time, won't they just strike it down again?
Well, you're asking me, will the Supreme Court play politics a second time in the row or third, or fourth or fifth. What the President is doing is exactly what he should be doing. He says, I got a big toolbox, and I'm gonna use every tool in that toolbox. He has already canceled student own debt for three point four million people. It's over one hundred billion dollars in debt that has been canceled. And now he's picking up another tool and says, Okay, they told me I couldn't use
this particular law. I'm going to try another one here.
One thing that we haven't heard from the White House on this, I'll call it a plan B of using day legal rationale, is what the scope of the plan would be. Who would qualify in terms of their income, how much debt would be canceled? What would you like to see from the administration on those numbers.
My position is pretty clear. More is better, More and more and more is my answer. I got three answers there, But I understand it this way. He is going through what's called negotiated regulation, So he's walking through the process. I very much hope that he's going to make this as broad as he can, But this is what negotiated
regulation is about. They're pushing him into another tool. So he's going to dot every eye, cross every t give the court as little room as possible to overturn him, and part of that will be constructing a plan under this other statutory authority.
So do you think that it's likely that we'll see the same numbers we did for the last plan, which was twenty thousand dollars for pelgrant recipients, ten thousand dollars in cancelation for other borrowers with an income threshold of one hundred and twenty five thousand dollars a year.
I think that's entirely possible. But I think that's what I know. That's what negotiated regulation is about. This is why they have a committee, this is why they put it out for notice and a comment. So it may not look one hundred percent like what he has put forward under a different law, but here's what I guarantee, It'll be something that comes from the same perspective how
to help the people who most need that help. Because here's what I want to always remind everybody about the President's plan that the Supreme Court struck down, and that is ninety percent of the help was going to people who make less than seventy five thousand dollars a year. This was a plan that was going to wipe out all student loan dead for more than a quarter of all African American borrowers and half of all Hispanic borrowers.
You know, you say student loandad and people immediately think, oh, fancy college, four year diploma, high earner. But that's not the description of who has student loan debt in America. Forty percent of the people dealing with student loan debt don't have a diploma. There are a lot of people who are in a family that can't afford to write a tuition check. But they've tried. They've tried a semester
of college a year, and life happened. When I hear somebody get on their high horse and say, well, I didn't take on debt to get here, I worked, you better understand America shifted. We don't make the same kind of investments in higher ed opportunities for people that we were making two generations back. Student loan debt has become the substitute to say to everybody, everyone's got an opportunity, but it's an opportunity right now that comes with a terrible hook in the middle of it.
How do you think that the White House and the Biden campaign is going to use this politically? This you heading into the twenty twenty four election.
You can call it politics. But what he's going to do is you can tell the truth, and that is that he's on the side of working people. And he's got a Supreme Court that jumped in and took on a case they should never have taken on, did not follow the law, and reached out in order to substitute their opinion on student loan debt for that of Congress and the President of the United States, the elected officials who clearly had the authority under the statute to do this work.
And what do you say to your Republican colleagues, who many of whom say and there was even a Bloomberg editorial on along these lines in recent months that said, look, no one has to take out student debt. This is not an obligatory thing. If you decide to borrow the money, you know it's your responsibility to pay for it. What do you say to those credits?
So I just want to redescribe that conversation just a little bit.
Please.
What you're saying is to some eighteen year old. So hey, listen, I know it sucks to be born into a family it doesn't have money. But here's the deal, don't try just quit. I not only think that is just plain ugly. I think it's bad for our democracy, I think it is bad for our economy. And let me give you an example of why. Back following World War Two, America said to the returning gis, we're going to make an
educational opportunity available to you. Now not perfectly executed. We made sure it was open to many people, but not to African Americans. And it turns out that we've studied the data on this. What happened by educating just a whole cohort of men, just kind of one generation of men. And the answer is, they're earnings so skyrocketed that they paid more than six times the amount of money that was given to them under the GI Bill, just in their taxes, just their personal taxes. So they paid this
back to the American taxpayer many times over. But here's the thing. They built the most robust economy in the history of the world. They expanded home ownership, They built America's middle class out of an infusion of support into education. I want to be the America that says, if you're young and you try hard, then we are willing to support you in education. Now, we can do that by making college free or making college fifty bucks a semester.
But if we're not going to do that, let us not say We're just going to lend you the money and if anything goes wrong, your life is destroyed financially forever. So maybe you'd be better off not to try. I don't want to be that. Don't try America.
There's a really interesting program that the Biden administration is starting to do as part of the Student Loan Plan, the Income Repayment Plan. One thing I am curious about, though, is the Department of Education is being asked to do so much right now, like develop these new rules and take in comments in my own reporting, I have heard.
You know, they're underfunded and understaffed. Do you think that they have the money and manpower to kind of take on all these really big long term policy questions and changes.
Yeah, boy, this is a real problem. And let's face it, they don't have any choice. It is what is upond them. There's been a real disconnect here. The Department of Education is being asked to do more and it got its budget cut, and that's a real problem for them. The people who work there are good, hard working public servants.
We're trying to get this right. We're trying to follow the rules that the lawyers tell them, that the courts tell them, that Congress tells them, and they just they don't have enough people because they don't have enough budget to get this done. It raises like this other issue that runs through Washington. Dar you see, we've had an IRS that's been underfunded.
Do you think that this is similar situation?
So I think it's very similar because it's the same kind of Republicans who don't like what the Department of Education is trying to do. When you underfund, you bear down on good people who are just trying to do their jobs, and then they end up with lousy customer service, lousy capacity to serve the public, which makes it a frustrating job. But it also makes it frustrating to people on the other end. It doesn't work if you're not willing to pay for it.
When we come back white House correspondent A Kayla Gardner joins me for a look at what the other side of the aisle thinks about students at forgiveness and what it all means for twenty twenty four. Joining me now, Bloomberg's White House correspondent, A Kayla Gardner. A Kyla, thank you so much for joining me.
I'm so excited to be doing this with you.
I know we've written a lot of stories about student loan debt cancelation together, so we're reunited. Yes, How are Republicans and people who are skeptical of this plan going to continue to fight the Democrats on this and what are the most potent arguments that they're making.
I think the best example of this is the House Education Committee. We have seen that committee pretty consistently criticizing the administration over their original plan. We actually saw a bill pass out of the House in the Senate to
cancel this program before the Supreme Court ruling. They even criticized Biden for this thirty nine billion dollar cancelation that we saw recently, which was basically the administration writing years of wrongs of millions of folks who had been paying into this income driven repayment plan for twenty to twenty five years, but hadn't received forgiveness basically because these were poorly managed. And they even called that illegal, even though this program has been around for so long and these
folks had been promised this debt cancelation. But their argument is basically that it's not fair for taxpayers who did not go to college, specifically because it was expensive, or folks who chose to go to the trade field. It's not fair for them to have to pay for someone else's decision. And that's sort of the core of their argument here.
You know, I talked with Senator Warren about Biden's loan cancelation plan, and she was really saying that the Biden administration should keep trying to push forward on soon loan cancelation even though the Supreme Court struck down its first attempt. O Kayla, you've written about Chief Justice Roberts's opinion in the case and why it hints at his potential opposition to this secondary plan. Can you explain that to us.
I'm not surprised that Senator Warren said that we've been writing since January of this year that progressives had wanted them to have this plan be in place in case the Supreme Court struck down their original plan, and folks like Elizabeth Warren had said they should have always used the Higher Education Act. They believe that has more authority and more flexibility, and that's something that legal experts said as well. It gives a broader authority than the Heroes Acted.
But even though Justice Roberts was ruling on the Heroes Act, he still mentioned the Higher Education Act in his opinion as just one of these examples of what he believes the executive branch has authority in terms of student debt cancelation.
But he laid out very specific circumstances that frankly, the government is already using to cancel debt forgiveness, and that is forgiveness for public servants, so nurses, firefighters, people who have gone bankrupt, people who have been severely or permanently disabled, folks who have died, or people that have been defrauded by their institution or closed down. And so he laid that out, and one legal expert basically said he was
telling the Biden administration, don't try this again. In short, like, basically, we know you're going to try this. It's not going to work. So any federal court that looks at that opinion as a president or if it actually goes back to the Supreme Court again, they're going to reference that opinion when they're ruling.
And what's the timeframe for the administration to unveil this plan? B When can we expect it?
Most folks this is think that this is going to take at least a year beyond the twenty twenty four election, and so we might not see this until the fall of twenty twenty four. Exactly what the plan is, because all we know right now is that it's a plan and they want it to help as many borrows as possible.
That's it.
But right now they are going through this negotiated rule banking process which many government agencies use, where they collect comments and sort of hear different stakeholders' opinions on what the ruling should be. But I can't imagine them releasing something that's so narrow and scope and having that sort of fill the gap of the last plan. So of
course we're just anxiously awaiting those details. But once it comes out, that's when legal experts and I'm sure there's manynservative groups that are waiting for the ccilia, And just to challenge it again.
We have estimates from experts at the Penn Wharton Budget think Tank at the University of Pennsylvania that estimate that this plan or are plan similar to it, because we don't know the details yet, could cost you know, anywhere up to five hundred billion dollars. What does the Biden administration say to people who are worried about how this would add to the deficit, particularly when inflation has been historically high for the past two years.
Well, I think the administration's talking point is always that they brought the deficit down right compared to the Trump administration, So that's what they always say. But Biden's main pitch, and this Bidenomics turn that we're hearing, is that he wants to give Americans quote unquote more breathing rooms, and he believes that people who have sought a college education
are deserving of this. But one thing that people criticized him for in the original plan is student debt is such a huge issue and a systemic issue that this plan was only to put out one time forgiveness. It was only going to help a very specific group of people. It's not going to help people who are in college right now or who are going to apply to college, And so that is sort of a big question here is how are they going to fix this system outside of debt cancelation?
And how are Senator Warren and other progressives on the hill, you know, student loan activists, I know the NAACP has been very involved in civil rights groups. How are all of these disparate groups sort of keeping the pressure on the administration to sort of fulfill these promises that they want to see.
Well, they want this plan to be completed as quickly as possible. They know that there's limits in the negotiated rulemaking process for it to be shorter, but they're sort of putting the pressure on for it to be done as quick as possible because they know that this is in jeopardy, say if a Republican gets in office come next year. And that's why I think this could be again a twenty twenty four election issue, because if Biden could stay in office, he could continue a legal fight
if one come next year. But if he leaves this profom, we'll completely be throdded and we'll be back to square.
One when we come back. More with White House Correspondent Akayla Gardner on what's next for student debt forgiveness. Where do you see student loan cancelation having sort of the biggest political impact in twenty twenty four. Do you see it sort of in how Biden's going to use in the campaign. Do you see it playing a key role in their message in certain states.
It's a great question because if you look at polling, student debt cancelation is pretty split. It's pretty divided amongst the elector at large, but under very specific groups it's very popular. So if you look at young folks, so there was a poll by Voters of Tomorrow that showed this has the most awareness or popularity amongst young people. More young people knew of this plan than anything else that Biden has done during his first two years in office.
And then if you look at people of color, so Black voters, Latino voters, they're way more likely to be in favor of student debt cancelation. I saw one poll that said seventy percent of Black voters and ninety five percent of Latino voters are in favor of all or some debt cancelation. So yes, there's like very specific groups that he's very aware that these are popular issues, and I think we've seen him in those settings when he's talking to an audience that is predominantly black folks or
protominate Latino folks. He knows to raise this, but this is not something that I think we see him talk about regularly all the time on the campaign trail, but he knows when it's important to certain groups to bring it up.
It did take a while for President Biden to come around on the issue of student loan cancelation. It was not something that he intended to do when he was running for president in twenty twenty. He seems to have embraced it. Now do you think he's all Anna, Kayla.
It's such a good question, because I feel like the issue of student at cancelation or free college was such like a fringe issue, especially when you go back to twenty sixteen. Bernie Sanders was really the only candidate that was fully embracing this idea. And Joe Biden has always been or sold himself as like a moderate, the centrist guy who's able to reach across the aisle. So it
was a big deal for him to embrace it. And I think it was a recognition that the center of the party has sort of shifted, like the fact that he has embraced it, and I'm sure it had a lot to do with polling, like they probably saw that this is a popular issue, this is gonna galvanize key parts of the Democratic base. But I think he has sort of embraced it now and he sort of has
to keep going. I don't know if internally Joe Biden is the biggest fan of it, because he's also like the labor guy, and he's also making this huge pitch to folks who are in the trade industry. At the same time, he's still trying to be everybody's Joe Biden. I think he has recognized that it's politically popular, that it was a good idea for him to embrace on the campaign trail. But we saw him take twenty months to release this plan, and I think that was also
very politically strategic. He waited for his key legislative bills, IRA American Rescue Plan, all of those things that could have upset key moderates like Joe Manchin. He waited for all those things to be accomplished before he rolled this out just weeks before the midterms. So I think that was definitely a signal that he did embrace on the campaign trail, but he was also aware that it was politically thorny, especially to get some of his major priorities done.
Thank you so much for joining us, a Kayla, Thanks.
So much, Nancy, So glad we got to do this.
Thanks for listening to us here at the Big Take, a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen, and we'd love to hear from you. Email us with questions or comments to Big Take Bloomberg dot net. Our supervising producer is Vicky Vergalina. Our senior producer is Katherine Fink. Our producers are Moe Arrow and Michael Falero.
Special thanks to Bloomberg Personal Finance reporter Claire Ballantine and Augusta Sariva for contributing their data and sources to this episode. Raphael, I'm see Lee is our engineer. Our original music is by Leo Sidrin. I'm Nancy Cook, and we'll be back on Monday with another Big Take. Have a great weekend.
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