As the Biden administration crafts a plan to cancel some amount of student debt, administration officials are reportedly raising concerns that adding income caps to the plan could be incredibly logistically complicated, risking the efficacy of the entire plan.
As Politico reports, officials in President Joe Biden’s Education Department are saying in private conversations that it would be extremely difficult for the agency to implement the administration’s tentative plan to limit student loan forgiveness by income. The agency simply doesn’t have income information for the vast majority of student loan borrowers, sources told Politico.
If the Biden administration were to place some form of means testing on the plan, the Education Department would be forced to require borrowers to provide proof of their income in some kind of application process. The added step could make it hard to implement the program before the November midterm elections, if it could be done in that timeline at all.
An Education Department spokesperson said that the agency is assessing options for “broad debt cancellation.” The White House has yet to finalize its plan.
Earlier this month, White House Press Secretary Jen Psaki said that Biden is considering limiting debt cancellation to borrowers making less than $125,000 a year. The cap is meant to preempt arguments from conservatives that only the wealthy would benefit from student loan forgiveness, even though those arguments have already been debunked; earlier this month, a report found that student loan forgiveness would be progressive, meaning that the poorest borrowers would benefit the most.
News of the income cap sparked frustration among progressives and debt advocates, who have been warning about this exact scenario; they say that applying means testing to the debt forgiveness would not only be unpopular among borrowers, but would also place unnecessary hurdles to the program that could limit access for those who need it most. Advocates for debt forgiveness were already frustrated that Biden will likely only cancel a small portion of the roughly $1.9 trillion in student loans owed by borrowers.
“The simplest way to implement student debt cancellation is to make it fully automatic and universal,” Braxton Brewington, Debt Collective spokesperson, said in a statement. “Forcing millions to apply for their rightfully owed cancellation will exclude the exact borrowers a targeted approach claims to help. If Biden needs reminding that burying borrowers and the Education Department in paperwork is wildly ineffective, he can look no further than the 99 percent denial rate of current programs like Public Service Loan Forgiveness,” or the PSLF program.
Indeed, the PSLF program is supposed to allow public service workers like teachers to apply for student loan forgiveness after a decade on the job. But the Government Accountability Office (GAO) found in 2019 that the program is completely burdened by its eligibility requirements, leading it to reject nearly every application it receives. Melissa Emrey-Arras, who led work on the GAO report, called it a “bureaucratic nightmare.”
If broader student loan cancellation were implemented in a similar way, it could backfire on the Democratic Party, which is eager to win over voters before the midterms. The majority of Americans support some form of student loan forgiveness, and polls have found that student loan forgiveness could help drive people who are likely to vote Democrat to the polls in the fall. A means tested program, meanwhile, could make the idea less popular.
“The landmines on this are everywhere,” Bryce McKibben, former policy adviser to Senate Health, Education, Labor and Pensions Committee member Sen. Patty Murray (D-Washington), told Politico. “Their options are: an income cap and political train wreck — or no income cap and broader, automatic-based relief for everyone. There’s not a lot in between.”
Progressive Representatives Mondaire Jones (D-New York) and Ayanna Pressley (D-Massachusetts) also told the publication that the cancellation should be broad and “reach as many people as possible,” as Pressley said.