After months of nervous anticipation for many borrowers approaching the beginning of repayment on May 1st, the Biden administration announced an extension to the repayment hold through August 31st. This policy is an extension of early-pandemic era policy aimed to stabilize the economy through the initial turmoil, and it’s drawing heavy criticism from some.
President Trump initiated this policy in March 2020 through executive action before the CARES Act wrote the effort into law. The CARES suspension of repayment only extended through six months; The extension has been continued by both the Trump and Biden administrations.
In taking this action the Biden administration has faced criticism from those who support the president who initially proposed, signed, and extended this policy. One commonly propagated line of attack has come from those who find it “unfair”. These individuals believe that by giving relief to those who hold student loans now, the administration is offending those who have already paid off their student loans.
There are two main objections I have to this line of thinking. First, just as it’s “unfair” for some to have access to relief when others did not have that access, how is it fair for every incoming class of students to pay more for the same product than their outgoing peers? It’s no secret that, when adjusted for inflation, tuition rates have steadily increased more substantially than other products and services in our economy. If we were measuring “fairness” maybe it would be “fairer” to develop a system where each outgoing class doesn’t receive a sweeter deal than incoming students are given.
My second objection is that any measure taken by a government in the present is going to provide a benefit to people in the present rather than those in the past. Is this really a reason not to act? Should we apply the same lens of “fairness” to the use of penicillin in the military? Was it “unfair” for the government to provide antibiotics to their soldiers in World War II when just twenty years prior in World War I they weren’t available? Both sets of soldiers invested their lives to protect this country, so why shouldn’t both groups have been provided the same aid?
This is obviously ridiculous. The US at the time adapted to the threats their soldiers faced based on new information and available technology. Today our economy is increasingly volatile, and we have two years of allowing borrowers access to more of their regular income to prove it’s been a necessary stabilizing force in the economy. Maybe instead of targeting the use of penicillin we should come together and focus our political agendas on combatting the drivers of war. Maybe instead of targeting specific relief measures we should come together and focus our agendas on combatting the rising costs of education.
For now, the Biden administration continuing Trump-policy will enable the 46 million Americans holding student loan debt to have access to more of their regular income. Without this extension, those citizens would have less disposable income, shrinking demand in the marketplace and further drive-up prices.
This action comes at no new expense to businesses since taxes have not been levied to promote this program. With no more expenses levied on businesses they do not have excess costs to then pass on to consumers through their power to set prices. All in all, this action won’t contribute to inflation. It is an extension of defenses against it. Progressives and student activists should remain vigilant to push their legislators as well as the Biden administration to take more sweeping action in the future, but for now, we can rest a bit easier with the knowledge that some misery in this moment has been prevented from ensuing.