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Protestors gather outside the U.S. Supreme Court ahead of the oral arguments in two cases that challenge President Joe Biden's $400 billion student loan forgiveness plan.
What We’re Watching: SCOTUS mulling student debt relief, Blinken visiting Central Asia, Biden's partial TikTok ban, Petro’s post-honeymoon phase
US Supreme Court weighs student loan forgiveness
The US Supreme Court began hearing arguments on Tuesday in a pair of cases that will test the limitations of presidential power and could derail Joe Biden’s plan to forgive $400 billion in student debt. Biden campaigned on debt relief, promising to help families burdened by the pandemic-fueled economic crisis. But now the court will decide whether Biden has the authority to forgive student loans. The White House cites a 2003 law aimed at alleviating hardship suffered by federal student loan recipients following a national emergency, but opponents say debt relief should require congressional approval. Biden hopes to fulfill his campaign promise ahead of next year’s presidential race, and millions of millennials and Gen-Z scholars – many of whom could see up to $20,000 of their federal student loan debt wiped away – will be waiting with bated breath. A decision will drop before the court adjourns in June, but so far, justices in the conservative majority seem critical of Biden’s move.
Blinken’s trip to Central Asia
US Secretary of State Antony Blinken on Tuesday met with foreign ministers from five former Soviet Republics: Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan. Blinken wants to signal solidarity with Russia’s neighbors and try to ensure that trade routes in these countries are not used by Russia to evade Western sanctions. The 'Stans are happy for the support because they have all felt pressure from Moscow to form closer ties with Russia. In particular, Putin has pressed Kazakhstan’s President Kassym-Jomart Tokayev, without success, to support Russia’s war in Ukraine. Tokayev has a reason for concern: Putin has cited the defense of persecuted ethnic Russians in Ukraine as a motive for his war, and Kazakhstan is home to the second-largest population of ethnic Russians among former Soviet Republics. These states, faced with varying degrees of economic trouble exacerbated by the food and fuel inflation that followed the invasion of Ukraine, could also use some direct US help. During the visit, Blinken announced $25 million of new funding to support economic growth in the region in addition to $25 million the Biden administration had already pledged.
Will China respond to Biden’s government TikTok ban?
China hit back at the US on Tuesday for joining the European Union in banning TikTok from government devices. China’s foreign ministry said that Washington’s move – which gives government employees 30 days to remove the social app from their phones – is an abuse of “state power.” Canada, for its part, followed up with a similar ban. These developments come amid fears that the app, owned by Chinese company ByteDance but based in Singapore, is being used by China’s Communist Party to gather government data. Will Beijing retaliate? Anna Ashton, a China expert at Eurasia Group, thinks any significant reprisal by Beijing for a partial or even a full TikTok ban in the US is unlikely. “It isn’t clear that Beijing will bear any significant loss if TikTok stops operating in the United States, nor is it clear that there would be any real gain in lashing out over such a ban,” she says, noting that there was no clear retaliation from Beijing when India banned TikTok a few years back. What’s more, Ashton says, “TikTok is a private company, and social media companies (much like online sales platforms) are not strategic priorities in China’s technological development plans.” Meanwhile, Congress will proceed on Wednesday to further a bill that would allow the Biden administration to ban TikTok for America’s 100 million users. Being tough on China is a rare bipartisan policy issue. Still, it’s unclear whether the Democratic-controlled Senate will back the GOP-sponsored legislation.
First cabinet reshuffle in Petro’s Colombia
A clash over healthcare and education reforms has provoked the first reshuffle of Colombian President Gustavo Petro’s government since he took power last August. The left-wing leader’s plans to expand the government’s role in both sectors drew a public backlash from several of his more centrist cabinet officials. Among them was Education Minister Alejandro Gaviria, whom Petro promptly sacked along with the ministers of sport and culture. Petro – a notoriously headstrong former guerilla – was elected on a change platform, but at the outset of his term, he brought in centrist allies to quell fears that he’d govern as a wild-eyed revolutionary. Now, as his honeymoon period melts away, is this reshuffle simply a necessary move to preserve policy unity, or is he starting to show his true colors?The Graphic Truth: Who pays most/least for college tuition?
One of the many reasons Americans have so much student debt is the high tuition fees charged by universities — especially private ones. Then again, graduating from an elite private school generally leads to a higher future salary and more opportunities, so many US students are willing to risk enormous debt in hopes of a huge payoff. But what about the rest of the world? We take a look at tuition fees across OECD countries.
Demonstrators call for US President Joe Biden to cancel all student loan debt in Washington, DC.
Biden forgives (some) US student loan debt
The White House on Wednesday unveiled President Biden’s long-awaited plan to tackle soaring student debt in America, which currently sits at a whopping $1.6 trillion.
What’s in the package? In a one-time deal, the government will cancel $10,000 in federal student loan debt for borrowers making less than $125,000 annually or couples with a joint income under $250,000. Recipients of Pell Grants for low-income undergrads are eligible for an extra $10,000 write-off.
The Biden administration also extended for the last time a pandemic-era pause on payments, which was going to expire on Aug. 31, until the end of 2022. It also wants to cap monthly payments at 5% of earnings. That would cover unpaid interest for Americans who'd owe zero because their income is too low, so their loan balances won’t grow.
Who’ll get the relief? All former students who borrowed money from the government under its higher education financial aid program for college, and current ones who took out a loan before July 1st of this year. With a stroke of his pen, the White House estimates that Biden will wipe out the student debt of some 20 million eligible Americans, almost one-third of the total.
The assistance applies to neither private loans, which account for the lion’s share of accusations of predatory lending, nor to already paid debts, even if they were federal loans.
Who's happy? Students who’ll benefit, obviously. That explains why more than a million Americans are now googling “student loans” and searching online for how to apply for debt relief.
Most progressives within the Democratic Party are thrilled, although some senators want Biden to go even bigger and cancel $50,000 per borrower with no income cap. Biden hopes it’ll energize young voters deep in student loan debt ahead of the November midterms, with Dems’ chances looking better than a couple of months ago.
Who’s not so happy? Most economists. Clinton and Obama administration veteran Larry Summers warns that debt forgiveness will further drive up inflation by giving some Americans extra cash to spend when prices are already high.
Who blew a gasket? Many students and their parents who saved money to pay their debt. But mostly the GOP.
"Republicans see the chance to point out that taxpayers are subsidizing the borrowing of college-educated Americans, who tend to have higher lifetime incomes and the most job opportunities," Jon Lieber, US managing director at Eurasia Group, says in this week's US Politics in 60 Seconds.
$10,000 in student loan forgiveness: what's the point?
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC, shares his analysis on US politics.
Today's question, $10,000 in student loan forgiveness: what's the point?
President Biden is going to announce up to $10,000 in student loan forgiveness for people making up to $125,000 a year. This is far short of the full student loan forgiveness that progressive activists have been calling for and even short of the $50,000 that Democratic leaders had embraced and Biden was considering earlier in the year. Still, the forgiveness is estimated to provide at least some relief for the vast majority of the 40 million Americans with student loans and will entirely wipe out the obligations of up to 15 million Americans.
Biden was very slow and hesitant to make this call, struggling with the issues of fairness. Millions of Americans who have paid off their loans or benefited from their parent's savings, sometimes at great personal cost, will receive nothing from this plan. And it is estimated to cost the federal government over $300 billion, wiping out entirely the savings from the recently passed Inflation Reduction Act. It could also be challenged legally, as there has been no explicit congressional authorization to forgive the debt. And it is Congress, not the executive branch, who controls spending. Politically, there is risk of some backlash, as Republicans see the chance to point out that taxpayers are subsidizing the borrowing of college educated Americans who tend to have higher lifetime incomes and better job opportunities. But for progressive activists and young voters, these concerns do not resonate, given that they think education should be a right that is fully funded by the government.
One issue that Biden is unlikely to address is the rising cost of a college education, which has massively outpaced inflation over the last several decades, partially driven by federal subsidies that support it. The move also introduces moral hazard that could increase future borrowing on the expectation that there will be more rounds of student loan forgiveness under future Democratic administrations. Politically, this is likely to be very popular with young voters who will disproportionately benefit from the forgiveness and get a mixed reaction from other Americans who are largely divided on the issue of student loan relief. Unfortunately for Democrats, young voters are some of the least reliable voters, and Democrats are hoping that this issue activates their base in November. Even if the forgiveness falls far short of what progressive access activists were hoping for.
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- The Graphic Truth: Who pays most/least for college tuition? - GZERO Media ›
Should the US cancel student loan debt?
Joe Biden has already cancelled more US student than any other president. But progressive Democrats want him to write off a lot more to reduce the racial wealth gap and help people recover better from COVID's economic ruin. Republicans are against all this because it would be unfair to current and future borrowers and to taxpayers footing the bill, not to mention subsidizing the rich.
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- $10,000 in student loan forgiveness: what's the point? - GZERO Media ›
- Biden forgives (some) US student loan debt - GZERO Media ›
- The Graphic Truth: Who pays most/least for college tuition? - GZERO Media ›
- The Graphic Truth: Who pays most/least for college tuition? - GZERO Media ›