America: Stress Test for Democrats – Politics

For so long he’s put off the decision, and after a year and a half in office Joe Biden has now made his way: On Wednesday he announced a haircut on student loans. He wants to waive up to US$ 20,000 for those receiving federal financial aid. It could benefit up to 27 million Americans at a cost of up to $300 billion.

Just before the midterm elections, the US president is making good on a campaign promise by which he wants to strengthen his position with two groups important to Democrats: young people and, in particular, African Americans.

Most Americans agree that college has become too expensive. Costs have tripled since the 1980s, and not just at posh private universities that charge more than $70,000 a year. As a result, many people begin their working careers with a mountain of debt, some of which still carries them well into retirement.

Until recently, however, it was only the far-left Democrats who demanded that Washington respond to the haircut problems. Then came the Covid pandemic, with 22 million Americans out of work, many without money to make repayments, and President Donald Trump freezing interest and debt on loans. Before the 2020 presidential election, moderate Joe Biden had to win over the left wing of the party. Instead, reluctantly, he promised a haircut.

Inflation drops, midterms loom

Once in office, Biden was reluctant to follow through on his promise. In doing so, he frustrated young and African-American voters in particular. They hoped in vain that he would do much for left-wing concerns like electoral law reform. The decision was not easy for Biden when inflation soared to nearly ten percent at times.

Things have calmed down a bit now, and some of Biden’s advisers are pushing to accommodate the party’s left wing for a critical phase of the campaign ahead of the midterm elections. Biden has now chosen a middle course: Resuming installment payments, but at a lower level. In return, anyone earning less than $125,000 a year would receive debt relief.

A stress test for Democrats

Biden is also stress testing his party. The question of racism resonates more or less openly through haircuts. The best federal grant, called a Pell Grant, goes to about a third of white students, compared to less than half of Latinos and more than half of African Americans. Studies show that more than 90 percent of whites can pay off debt, while 95 percent of African Americans can’t.

The left points out that minorities earn less, parents can’t support them with their savings, and they often drop out of school because they work multiple jobs and have to support relatives. Moderates and the right, on the other hand, emphasize personal responsibility and criticize that a haircut punishes those who have paid their debts.

Democrat Tim Ryan, who is in a tight Senate race against Trump favorite JD Vance in Ohio, distanced himself from Biden’s plan — one of several moderate candidates he criticized on Wednesday. Biden “sends the wrong message to the millions of undergraduates in Ohio who are working hard to make ends meet,” Ryan said.

Republicans have announced they will fight for a haircut. They can’t vote on it because Biden is bypassing Congress and arguing that the education secretary can decide on his own authority. Conservative groups will now try to take legal action against it. However, it is uncertain whether they will find a legal basis for this.