As President Joe Biden and Democrats stare down a tricky midterm election cycle that could see them lose majorities in both the House and Senate, the recently extended student loan pause could be one way to help keep young voters engaged this November.
Initiated by former President Donald Trump in March 2020 as a pandemic measure, Biden has enthusiastically extended the pause, billing it as a way to protect people from financial hardship, while White House officials boast that the administration is the only one in history under which no one has been required to pay back student loan debt.
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“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship,” Biden said in a statement announcing the latest extension. “Delinquencies and defaults could threaten Americans’ financial stability.”
While the new deadline is Aug. 31, it’s likely to be extended beyond the November midterm elections. A group of nearly 100 Democratic lawmakers, including heavy hitters like Sens. Chuck Schumer and Elizabeth Warren, signed a letter asking for the loan pause to last through the end of 2022.
The letter argues that requiring student loans to be repaid would “financially destabilize” borrowers and cause hardship for those who cannot afford it. However, it may also help energize a key voting bloc for Democrats defending tiny majorities in Congress.
“Certainly, in a midterm year that doesn’t have the greatest outlook for Democrats in the legislative branch, making sure that you keep young voters in the Democratic caucus is important,” said Central College political science professor Andrew Green. “Going into the 2022 midterms, obviously there’s a vested interest among Democrats to make sure voters are energized and ready to go to the polls.”
While student loan debt affects voters of both parties, it tends to be concentrated among younger voters, who tend to favor Democrats. Republicans have mostly called for the pause to end, with Arkansas Sen. Tom Cotton calling the extension “an insult” to those who pay their debts.
A poll conducted by left-wing think tank Data for Progress found that nearly half of respondents indicated that broad student loan forgiveness would motivate them to vote, and a Morning Consult poll found that pushing back the repayment date was broadly popular with younger voters.
Justification for the pause has gradually shifted away from the pandemic and toward the shock that requiring payments would create, particularly with inflation running high. For example, the letter from 100 Democrats argues that most borrowers are not financially prepared to repay loans due to inflation.
However, the pause itself contributes to inflation, argues Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget.
He writes that full student debt cancellation would boost inflation by up to another 0.5% within the first year, due to higher consumption combined with lingering supply constraints. Goldwein is also concerned about downstream effects, such as prospective students taking out larger loans, anticipating future rounds of debt cancellation, and schools charging higher tuition for the same reason.
The pause affects 41 million borrowers who collectively hold more than $1.3 trillion in total debt and has already cost taxpayers more than $100 billion, according to Education Department estimates.
When the pause was first instated two years ago, unemployment had shot to 15%, but it’s now down to 2% for college graduates, calling into question the need for a longer pause affecting only the highly educated.
“I don’t think this resonates with working-class voters who are struggling to pay their bills because of high inflation caused by Biden’s reckless spending spree,” said Republican strategist John Feehery.
The Biden administration inherited the pause from Trump, but officials such as White House chief of staff Ron Klain and press secretary Jen Psaki are now touting it as a plus for the current White House.
“Obviously, we look at and assess what the needs are for the people who are impacted by the payment of student loans as we make these assessments,” Psaki said Tuesday. “I would note that no one has been required to pay a single dime of federal student loans since the president took office.”
That’s a peculiar fact to highlight, Goldwein said.
“I wouldn’t brag about the fact that people are not repaying their debt,” he said. “That’s not normally considered a virtue.”
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With the extensions lasting at least another five months, the wider issue of where they end comes into view. Biden made a campaign promise to have taxpayers absorb at least $10,000 per person of student loan debt. However, since taking office, he has said he’d support the move if Congress approves it first, a point Psaki reiterated on Wednesday.
Even if broad cancellation doesn’t come to pass this year, if the pause is extended beyond election day, young voters looking for permanent loan forgiveness would have only one party to turn to.
“I do think there’s a real concern that young voters will not show up in November,” said Green. “That could make a pretty bleak electoral map even bleaker.”
