Biden's student debt forgiveness is a potential midterm boon for Democrats — and a major gamble

  • Democrats hope Biden's action will energize young voters during an non-presidential election.
  • Republicans set out to frame Biden's plan as an unfair "handout for the rich."
  • If inflation worsens, Biden's debt forgiveness could provide new ammunition for Republicans.

WASHINGTON – Less than three months before November's midterm elections, President Joe Biden jolted the race to control Congress with historic action Wednesday to cancel student loan debt for millions of Americans.

Yet his move is a major gamble, presenting both an opportunity to energize young voters and handing Republicans new lines of attack on fairness and wealth.

Biden's announcement could have ripple effects in battleground Senate and House race across the country. It comes as Democrats, who face headwinds to hold on to power, have shown signs of outperforming early expectations after a series of legislative wins in Congress and a Supreme Court decision that overturned abortion rights.  

More:'Debt and no degree': Biden cancels as much as $20K in student loan debt: live updates

Biden's big bet  

The White House is betting that the president's move to cancel at least $10,000 in student loan debt to millions of borrowers, and up to $20,000 to Pell Grant recipients, will motivate young voters otherwise unenthused to vote during a nonpresidential election. 

But Republicans set out to frame Biden's student debt forgiveness plan as a "handout for the rich" – one that rewards liberal college-going elites at the expense of Americans who could not afford college and others who worked hard to pay off their debts.

Although some progressives sought even more debt relief, the move delivers on one of Biden's core campaign promises to young voters.

"This allows him to go back to them and say, 'Send us back, send me a Democratic Congress back, and we'll get more done for you,'" said Todd Belt, professor and political management program director at George Washington University. "So I do think that will help with the lack of enthusiasm we see with Gen Z voters." 

At the same time, the plan won't be popular with all Americans. 

"The risk is there's a very firmly entrenched view in American society that you have to work for your education," Belt said. "And people have a tendency to think that, 'I had to pay for mine, you should have to pay for yours.'"

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President Joe Biden speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington.

The calculus for Democrats 

  • Wildly popular among young voters. A Harvard University poll found that 85% of Americans 18 to 29 years support some form of government action on student loan debt. This voting block votes overwhelmingly Democratic and supported Biden in 2020. 
  • Electoral math. This doesn't necessarily mean more young voters will flock to the polls, especially since some progressives wanted more. Although Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren, D-Mass. and several progressive groups lauded Biden's action, they pushed for at least $50,000 in student loan debt forgiveness.
  • A reason to be hopeful? Democrats are far more bullish about their chances in the midterms today than a few months ago. Biden's allies say the president already delivered on one key priority for young voters with historic spending on the climate in the Inflation Reduction Act. The Supreme Court's overturning of Roe v. Wade also energized the base. And with student debt cancellation, Democrats have given young progressive voters a third reason to vote for them. 
Student loan debt holders protest outside the White House staff entrance on July 27, 2022, in Washington, D.C.

Unpacking the Republican strategy 

  • A lot of taxpayers don't have student loans. More than 43 million people have federal student loan debt in the U.S., and the average borrower has about $37,000. But Republicans are focusing on the many more Americans adults – around 80% – who don't have federal student loans. 
  • Reaching blue-collar Americans. In recent election cycles, Republicans have amassed massive electoral advantages among white voters who lack college degrees, particularly in rural areas.
  • Where to watch. Republicans could use Biden's student loan cancellation as a wedge to try to peel off even more of these voters in Rust Belt states such as Pennsylvania, Wisconsin and Ohio that have competitive Senate races.

Who qualifies:Do I qualify for student loan forgiveness? What to know about Biden's debt plan.

Opposition:'Windfall for the rich': Republicans warm up attacks as Biden weighs forgiving student debt

Senate Minority Leader Mitch McConnell, R-Ky., called Biden's action on student loans a 'slap in the face to working Americans who sacrificed to pay their debt.'

The big unknown: Inflation 

Biden, whose decision on canceling student loan debt dragged on for months, was hesitant in part because of concerns any action could further accelerate 40-year high inflation. Heading into the midterms, inflation and the economy remain one of Democrats' biggest vulnerabilities despite gas prices easing the past month. 

Prominent Democratic economists, led by former Treasury Secretary Larry Summers, have argued the billions more collectively in Americans’ pockets they won’t have to repay the government could increase demand and further spike inflation. Republicans Wednesday worked to tie student debt forgiveness with anxieties about rising consumer prices.

The White House dismissed inflation concerns. Officials said the restart of debt repayments to the government – after an extended moratorium that now ends Dec. 31 – and targeted savings for low-income Pell Grant recipients will “largely offset” each other and have a neutral or deflationary impact.

What they're saying

  • "I think it reinforces that elections have consequences," said Cedric Richmond, a former Biden White House aide and DNC senior adviser, arguing it will turn out young voters. "The fact that their president got it done, I think encourages them that the system works when you're involved in it."
  • Most Democrats lauded the move, but some up for reelection sought to distance themselves. "In my view, the administration should have further targeted the relief, and proposed a way to pay for this plan," said Sen. Michael Bennet, D-Colo. 
  • Minority Leader Mitch McConnell slammed Biden's action. "Democrats' student loan socialism is a slap in the face to working Americans who sacrificed to pay their debt or made different career choices to avoid debt," he said. "A wildly unfair redistribution of wealth toward higher-earning people."
  • Jason Furman, former economic adviser to President Barack Obama, raised inflation concerns. "Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless," he said in a tweet.
  • Mark Zandi, chief economist at Moody’s Analytics, pushed back at that logic. “It is clearer that the impact on growth and inflation in 2023 will be marginal,” Zandi said. “Ending the moratorium will weigh on growth and inflation, while debt forgiveness will support them. The net is largely a wash.”

The big picture

Put simply, Biden's announcement is unprecedented in the nation's history of student borrowing. And it's sure to have political ramifications. 

Biden and Democrats hope the boost for millions of debt-saddled Americans outweighs the pushback. But even the president, as he revealed his long-awaited decision, acknowledged the competing viewpoints. 

"I understand that not everything I'm announcing today is going to make everybody happy," Biden said, noting some say it goes too far, others not far enough. "But I believe my plan is responsible and fair. It focuses the benefit on middle-class and working families."

Reach Joey Garrison on Twitter @joeygarrison.