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means testing
Anger Mounts Over Biden's Reported Plan to Means Test Student Debt Relief
"The hoops of means-testing means that millions and millions of borrowers won't get help," warned one advocate.
Aug 23, 2022
President Joe Biden is reportedly on the verge of announcing his plan to cancel $10,000 in federal student loan debt after months of delays, but not every borrower will be eligible for relief--and progressives are warning that the administration's commitment to mean-testing could leave millions of vulnerable people behind.
As soon as Wednesday, Biden is expected to make public his intention to unilaterally wipe $10,000 off the balances of undergraduate student loan borrowers with annual incomes of less than $125,000. The president is also poised to extend the student loan repayment freeze for "several more months," according toNBC News.
"If the history of means-testing in America is any guide, bureaucratic snarls will prevent vulnerable populations from receiving relief."
Groups representing borrowers cast the emerging details of Biden's plan as a betrayal. Melissa Bryne, executive director of We The 45 Million, said in a statement Tuesday that "the rumor of $125,000 means tests is an outrageous violation of President Biden's March 2020 campaign promise of a minimum of $10,000 cancellation for all borrowers."
"President Biden must refuse all pressure from unserious, generationally wealthy economists who have never lifted one finger to fight for free higher education and instead see themselves as allies of the banks," Bryne said in a thinly veiled reference to former U.S. Treasury Secretary Larry Summers, a multimillionaire who has vocally attacked the idea of student debt forgiveness.
"Every borrower was already means-tested--they didn't have the means to pay for college," Byrne continued. "Borrowers trust President Biden to do the right thing and tell the pro-means testers to take their concerns far away from him."
The predominant concern among opponents of means-testing isn't that people with high incomes will be denied student debt relief; it's that people eligible and desperate for relief will get lost in the bureaucratic maze that income-based restrictions inevitably create.
As The American Prospect's David Dayen put it recently, all borrowers seeking debt relief under a means-tested cancellation program "will have to navigate the often punishing bureaucracy of confirming their earnings level."
"It means a massive headache for millions to cut out a minuscule proportion of borrowers," Dayen wrote. "And if the history of means-testing in America is any guide, bureaucratic snarls will prevent vulnerable populations from receiving relief to which they are entitled."
Byrne voiced a similar concern Tuesday, saying, "The hoops of means-testing means that millions and millions of borrowers won't get help."
A new analysis released Tuesday by the Penn Wharton Budget Model shows that the majority of the benefits of canceling $10,000 in student debt for borrowers who earn less than $125,000 a year would go to the bottom 60% of earners.
Mark Huelsman, policy and advocacy director at the Hope Center for College, Community, and Justice, stressed the analysis makes clear that "the majority of relief would go toward the bottom 60% of earners even if there was no income cap."
"That's a lot of potential administrative burden for a very similar result," Huelsman added.
\u201cAlso just to note, the majority of relief would go toward the bottom 60% of earners even if there was no income cap! That's a lot of potential administrative burden for a very similar result.\u201d— Mark Huelsman (@Mark Huelsman) 1661266941
The plan Biden is expected to announce Wednesday is a far cry from the ambitious student debt cancellation that prominent Democratic lawmakers and advocacy organizations have been demanding from the president for more than a year.
Sen. Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.), among many other lawmakers, have called for at least $50,000 in student debt forgiveness per borrower, a proposal that would completely clear the student debt balances of 80% of federal borrowers.
By contrast, canceling $10,000 in student loan debt per person would amount to full forgiveness for just around a third of borrowers.
"President Biden should cancel student debt to: help narrow the racial wealth gap among borrowers, provide relief to the 40% of borrowers who never got to finish their degree, and give working families the chance to buy their first home or save for retirement," Warren tweeted Tuesday. "It's the right thing."
For months, Biden and White House officials have been deliberating over the right course of action to address a crisis affecting tens of millions of people across the U.S. The average federal student loan balance is nearly $38,000, according to the Education Data Initiative, and Americans collectively hold close to $2 trillion in student debt.
The Washington Postreported Tuesday that administration officials have weighed whether canceling student debt "could alienate voters who had already paid theirs off, and polling results have been mixed."
"Centrist Democrats have begun pushing back strongly," the Post added. "Summers and Jason Furman--two prominent Democratic economists who served in prior administrations--have stepped up their case against broad loan forgiveness, arguing it would exacerbate inflation by increasing overall spending."
"These claims have been strongly contested. The Roosevelt Institute, a left-leaning think tank, argued that canceling student debt would 'increase wealth, not inflation,'" the Post noted. "The Roosevelt Institute paper found that inflation resulting from debt cancellation would be negligible and that ending the payment moratorium would more than outweigh that effect. Requiring borrowers to resume payments would reduce inflation by slowing consumer spending."
On top of the potential economic benefits of broad-based student debt cancellation and the relief it would provide to countless hurting households, proponents and observers have also pointed to the political upside for Biden and the Democratic Party heading into the pivotal November midterms.
"At this point people want something, and they need something big like a big policy that they can look at and say, 'OK, he is trying to do something for us,' and debt relief would definitely be that," Robert Reece, a sociology professor at the University of Texas at Austin, told Inside Higher Ed.
Inaction, meanwhile, could be politically disastrous for Democrats. A survey released last year found that 40% of registered Black voters "are willing to stay home unless student loan debt is canceled."
Student debt relief is also massively popular with young voters, another key component of the Democratic base.
But Derrick Johnson, president of the NAACP, warned the president Tuesday that "$10,000 alone is meager, to say the least."
"It won't address the magnitude of the problem," he told the Post.
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Manchin Pushes Even More Healthcare Means Testing as West Virginians Suffer
As the West Virginia Democrat blocks Medicare expansion and demands more restrictions on Affordable Care Act subsidies, residents of his home state are "extracting their own teeth with a hammer."
Jun 23, 2022
Having tanked his party's effort to expand Medicare and close the Medicaid coverage gap, Sen. Joe Manchin is now dangling his support for an extension of Affordable Care Act subsidies as massive premium hikes loom for millions of people who buy insurance on the exchanges.
Insider reported Wednesday that Manchin has "signaled he's open to extending enhanced subsidies under the Affordable Care Act, a move that would help Democrats avert a huge political threat in the November midterms."
The American Rescue Plan--a Covid-19 relief package that President Joe Biden signed into law last year--included provisions that boosted ACA subsidies for low-income people and ended the income cap on subsidies. The changes were aimed at ensuring no one is forced to pay more than 8.5% of their total income to purchase health coverage in the ACA marketplace, which can be prohibitively expensive without federal subsidies.
But the provisions are set to expire at the end of the year in the absence of congressional action, sticking the roughly 14 million people who buy insurance on the ACA exchanges with dramatically higher premiums. Notifications of premium increases would begin going out in October, just ahead of the crucial midterm elections.
Even though eligibility for ACA subsidies--which progressives often characterize as gifts to the insurance industry--is already restricted on the basis of income, Manchin told Insider that he wants even more means testing, which he called "the main thing."
"We should be helping the people who really need it the most and are really having the hardest time," said Manchin, who supported the ACA subsidy boost in the American Rescue Plan. "With healthcare, people need help. They really do."
That's certainly true of people in his home state of West Virginia. After visiting a free medical clinic located just miles from Manchin's riverfront home in Charleston, The Lever's Andrew Perez reported earlier this week that one resident, Charles Combs, "has resorted to extracting his own teeth because dental care is too expensive."
Traditional Medicare currently doesn't cover dental services. Late last year, Manchin blocked an effort--spearheaded by Sen. Bernie Sanders (I-Vt.)--to expand the program to cover dental, vision, and hearing.
"The Charleston clinic made clear just how badly people need such care--and not just seniors, and not just West Virginians. Combs, for instance, is still in his 50s, while the clinic saw patients of all ages driving hours from Ohio, Kentucky, and Virginia," Perez noted. "The [Remote Area Medical] clinic hinted at the kind of universal healthcare system America could have, if not for senators like Manchin and their healthcare industry donors."
"The organization doesn't ask patients about what its team calls the 'three I's': identification, income, or insurance," Perez continued. "Patients are treated with kindness, compassion, and professionalism--and fairly quickly. All services are free."
\u201cThere are uninsured people in @Sen_JoeManchin's state extracting their own teeth with a hammer. https://t.co/MRIMwP3Qny\u201d— Marisa Kabas (@Marisa Kabas) 1655930698
In an interview with Punchbowl News this week, Manchin voiced concerns about the price tag of extending the ACA subsidies--scrutiny he has not applied to the trillions of dollars in Pentagon spending he's voted for over the past decade.
"The bottom line is there's only so many dollars to go around," Manchin said.
According to a recent analysis by Families USA, the roughly 23,000 West Virginians who buy health insurance coverage on the ACA exchanges will see their annual premiums rise by an average of $1,536--63%--if Congress lets the subsidy provisions expire.
"With little debate or media focus, Democrats are on the verge of dooming millions of Americans to huge new healthcare bills, which will in turn serve to ruin any hope Democrats have of winning the midterms," journalist Jon Walker warned in The American Prospect earlier this year. "Beyond broadly hurting 14 million people, the end of these subsidies will create thousands of uniquely horrific stories of financial devastation."
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Biden's Means Tested, Try-to-Please-Everyone Student Debt Relief Plan Will Please No One
What should be a slam-dunk opportunity to energize voters young and old may instead become a bureaucratic mess that offers too little relief for too much complexity.
May 27, 2022
The Washington Post reported on Friday morning that the Biden administration is finally considering a concrete policy of student debt cancellation, but not the one for which activists have been fighting for years. The Post reports that the White House is considering canceling just $10,000 per person in student debt, under a means-tested regime which would limit forgiveness to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly.
Imagine if millions of people suffering under unpayable debt burdens woke up one day, checked the news, and found out that the thing that had been weighing on them since they were 18 years old had suddenly vanished, all thanks to the President.
The Post outlines several obstacles to implementing means-testing, including that "the Education and Treasury departments cannot readily share borrowers' tax information, and legislation easing the restriction won't take effect for two years." Additionally, means-testing student debt relief could exclude low-income borrowers who don't file taxes; could require complex identity verification processes; and could take months to implement no matter what, again according to the Post. While an estimated 97% of debt holders' income falls under the proposed thresholds, these serious bureaucratic challenges will likely exclude millions of the most vulnerable from attaining debt relief in practice.
If this plan is implemented, then by trying to please everyone, Biden will likely please no one. What should be a slam-dunk opportunity to energize voters young and old, and especially voters of color, may instead become a bureaucratic mess that offers too little relief for too much complexity--which is exactly what student debt profiteers want from a loan forgiveness policy, if we are to have one at all.
The political cross-pressures Biden faces on this issue are real, but they can be solved with strong, clear messaging and additional policy actions that are firmly within the executive's power. Any student debt forgiveness policy will inevitably be distorted in attack ads from bad-faith corporate centrists and the right-wing propaganda machine into a false claim that this policy only helps educated elites. This is despite the fact that a college education has had little correlation with social mobility since at least the Great Recession. Indeed, much of the union organizing wave we're seeing at low-wage jobs right now, which Biden rightly celebrates, is being driven by college-educated baristas and warehouse workers. But no matter what, the opponents of this policy--themselves educated, wealthy elites--will try to depict Biden as only aiding the privileged and leaving the non-college educated behind.
The solution to that problem is to help student debtors and people who didn't attend college by improving people's lives all around with a broad slate of policies, not by making this policy inadequate. Biden has other executive authorities he can use to offer aid to constituencies including voters who never attended college. Biden can decriminalize cannabis, correct the federal poverty lines to bring millions into social safety net programs, march in on prescription drugs, and close longstanding loopholes in the tax code for corporations and ultrarich individuals.
Using his executive authorities on any or all of these issues would show that the President cares about the suffering of ordinary people being plundered by the elite.
Using his executive authorities on any or all of these issues would show that the President cares about the suffering of ordinary people being plundered by the elite. That's what the political impact of student debt cancellation would be, too: imagine if millions of people suffering under unpayable debt burdens woke up one day, checked the news, and found out that the thing that had been weighing on them since they were 18 years old had suddenly vanished, all thanks to the President.
That moment of hope will not materialize if it's clouded by frustrating paperwork and time-consuming red tape, and artificially limited to only remove a small percentage of the burden. This will come down hardest on the most vulnerable: for 83% of Black borrowers, canceling only $10,000 of debt would still leave them with a balance higher than their original amount.
Biden, by nature, believes in compromise. It's how he's survived as a politician for decades, and what he wants to revive in our political currents. Moreover, he is considering an executive policy rather than the legislative policy he prefers, which is likely already hard for a Senate institutionalist like Biden. But this proposed "compromise" is not something which everyone can live with--it is something which no one can tolerate. If Biden's plan for energizing the indispensable youth vote is to make it too difficult to get insufficient aid, he will do himself--not to mention his constituents, his party, and his country--no favors.
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