The policy applies to individuals earning less than $125,000 per month, while individuals who paid for college using Pell Grants are eligible for a $20,000 loan cancellation. Biden also decided to extend the pause on federal student loan repayment to January 2023 and will permit borrowers with undergraduate loans to cap payments at 5% of monthly income.
Pappas, who faces a competitive race to keep his seat in the House of Representatives, argued that Biden is out of line by ignoring Congress’ mandate to originate policy.
“We all know the cost of higher education is crushing families … but this announcement by President Biden is no way to make policy and sidesteps Congress and our oversight and fiscal responsibilities,” the lawmaker said in a statement. “Any plan to address student debt should go through the legislative process, and it should be more targeted and paid for so it doesn’t add to the deficit.”
Pappas clarified that he supports other plans to lower the price of education such as expanding Pell Grants, ensuring more affordable community college, and targeted debt cancellation for students entering “vital professions” like nursing, yet finds Biden’s one-time debt forgiveness lacking.
“The President’s plan also doesn’t address the underlying issue of the affordability of higher education, and it is clear that the high cost continues to limit opportunities available to students,” he continued. “Ultimately we must ensure everyone has the chance to further their education and gain the knowledge and skills they need to thrive, and I’ll continue to make that a priority.”
White House officials had been weighing the cancellation of student loans for months before officially landing on the $10,000 figure, according to a report from CNN, though some Democratic lawmakers have supported canceling up to $50,000 per borrower.
Eliminating $10,000 of debt per borrower would cost $298 billion in 2022 and a total of $329 billion by 2031 should the policy be renewed every year, according to a nonpartisan analysis from the University of Pennsylvania’s Wharton School. Less than 32% of the funding would benefit Americans in the two lowest income quintiles, while 42% would benefit those earning more than $82,400 per year.
Indeed, a report from the Brookings Institution explained that one-third of student debt is owed by the wealthiest 20% of households, while only 8% is owned by the bottom 20% — likely because graduate degrees are often necessary for the most lucrative professions.
Pappas is not the only left-wing official to reject Biden’s student loan cancellation plan. Lawrence Summers — who served as Treasury Secretary under President Bill Clinton and National Economic Council Director under President Barack Obama — who contended on Monday that funds for debt cancellation could be better utilized elsewhere.
“The worst idea would be a continuation of the current moratorium that benefits among others highly paid surgeons, lawyers and investment bankers,” Summers said. “If relief is to be given it should not set any precedent, it should only be given for the first few thousand dollars of debt, and for those with genuinely middle class incomes.”